Airlines Brace for Another Financial Hit from Winter Storm
Airlines & Airports Rich Thomaselli January 22, 2014
PHOTO: Several winter storms have set the airlines industry back with cancellations and delays.
So far, this certainly has been the airlines’ winter of discontent.
For the second time in less than three weeks, a major snowstowm in the northeast forced the cancellation or delay of thousands of flights. The final numbers on Winter Storm Janus won’t be tallied for another few days, but expect the airlines to take another hit in the vicinity of the $50 million to $100 million it lost on Winter Storm Hercules given the comparable number of cancellations and delays.
Airlines analyst Helane Becker, of New York-based Cowan and Co., wrote in an investor’s note that she estimated Hercules cost the industry anywhere between $50 million and $100 million thanks to nearly 3,000 cancelled flights and 10,000 delayed fights.
Janus is darn near close.
As of 10 a.m. this morning, FlightAware.com, a flight tracking service, reported that 4,472 flights had been cancelled in the U.S. since Tuesday, and 3,859 had been delayed.
The airlines have insurance against man-made and natural disasters, but the industry can ill-afford another $100 million setbacks every three weeks.
“Everybody thinks that because the airlines lose flights to weather that you’re not paying extra fuel, you’re not paying this, you’re not paying, but it’s not true,” Evan Gold, a senior vice president at Berwyn, Pa.-based Planalytics, previously told TravelPulse.com. Planalytics is a business weather consultancy, mapping out storms and advising companies on best practices during such natural events. “Airlines just don’t get it back by flying three extra times if they lose three flights,” Gold added.
In weather-related instances, airlines automatically expect to lose 25 to 30 percent of the money spent on refundable tickets, emergency travel or business travel related to that specific time frame. Some passengers simply won’t re-book for logistical reasons.
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