Missed trips due to severe winter cost US fliers US$5b

[NEW YORK] Severe winter weather cost US airline passengers US$5.3 billion in expenses and missed workdays as carriers cancelled and delayed trips in the worst period of flight disruption since Sept 11.

The cost to airlines may be as much as US$500 million on increased operating expenses and lost revenue, according to industry data tracker MasFlight. Cancellations from Dec 1 through Feb 28 totalled 108,600, almost double the average of previous winters of 57,600.

MasFlight's estimate offers a glimpse at the economic toll from snow and storms that pummelled a broad swath of the country this winter, disrupting travel plans for more than 90 million people. United Continental Holdings Inc has signalled a key revenue gauge will be lower this quarter as a result.

"This will be remembered as one of the worst winter storm periods in aviation history," said Tulinda Larsen, vice president of Bethesda, Maryland-based MasFlight.

And it's not over. Yet another storm swooped through the mid-Atlantic on Monday, closing government offices and shutting schools.

The storm is the latest in a season that has set many records and shows little sign of ending soon. January racked up more than 49,000 cancellations, as many as the past three Januaries combined, MasFlight said previously. Feb 13 was the worst day of winter with 7,561 cancellations, topping the 7,400 on Oct 29, 2012, that resulted from Hurricane Sandy.

MasFlight's analysis is based on industry metrics for average passengers per aircraft and the costs to fliers. It used data from Airlines for America, the Federal Aviation Administration, the Department of Transportation and the Joint Economic Commission. These cost metrics found cancellations cost passengers US$37.60 per hour, MasFlight said. Since the airlines are operating at such high load factors, accommodating displaced passengers is estimated to take an extra 18 hours of travel, MasFlight said, citing the General Accountability Office.

The flight cancellation rate this winter of 5.5 per cent exceeded the last severe winter period of 2010-2011 of 4.3 per cent, MasFlight said in a release on Monday. The total cost to passengers this winter compares with a typical winter average of US$2.9 billion and an average over the two previous winters of US$1.5 billion.

Kat Robison, 29, takes advantage of advance travel advisories to ensure she can make her weekly trip to Pittsburgh from Raleigh, North Carolina, she said.

"I usually take a late morning flight on Wednesday, and I've ended up having to take an early morning flight to avoid a cancelled flight or to get out before weather hits," said Ms Robison, who flies every week to attend graduate school at Youngstown State University in Ohio and returns every Friday morning.

Earlier flights in the morning mean that Ms Robison has had to pay another US$30 for an extra day for a rental car about three or four times this year, she said.

The costs from the continuous storms are piling up beyond airlines and passengers.

Insured losses, from frozen pipes, collapsed roofs and other weather-related incidents, reached more than US$1.5 billion since Jan 1, which would make this one of the top five costliest winters since 1980, according to the Insurance Information Institute in New York.

Airlines stand to lose money from the travellers who have cancelled flights to one-time events like business conferences, said Helane Becker, an analyst with Cowen & Co in New York.

"They'll be able to get some of it back, but there is some of it that is lost forever," she said.

The storms affected the country's biggest airline hubs, including airports in Chicago, Atlanta, and the busiest airspace in the US, the New York-New Jersey region, resulting in about US$4.5 million in costs for airports, MasFlight said.

United, American Airlines Group Inc, US Airways Group Inc and JetBlue Airways Corp topped the list of cancellation rates during the period, MasFlight said.

United, the world's second-largest airline, was the first airline to detail how the storms will affect its finances. It said last week that revenue for each seat flown a mile will decline this quarter because the winter storms caused more than 22,500 flights to be cancelled. - Bloomberg