- The Washington Times - Tuesday, August 30, 2005

CHICAGO (AP) — Katrina forced scores more flight cancellations involving New Orleans and other Southern cities yesterday as airlines juggled their schedules around one of the worst storms on record.

Hurricane-related disruptions also continued to have an impact far more worrisome for U.S. carriers than added costs and lost revenue from the flight turmoil: oil prices that spiked to record highs of more than $70.

“Overall, the storm will hurt, but it’s certainly not the same as the impact of rising oil prices,” said Philip Baggaley, airline analyst for Standard & Poor’s Corp. Any further significant increase, he said, will have “a large effect.”

Those consequences might include pushing Delta Air Lines Inc., Northwest Airlines Corp. and Independence Air operator FLYi Inc. into bankruptcy as well as frustrating the efforts of United Airlines parent UAL Corp. and US Airways Group Inc. to emerge from Chapter 11 successfully.

“Today’s jet fuel prices are crushing and could prove to be a knockout blow for some,” economist John Heimlich said in a report for the Air Transport Association, an industry association for U.S. carriers.

For the short term, airlines were scrambling to rearrange flights within the limitations set by Katrina’s devastating path and airport closures. The Federal Aviation Administration said two commercial airports remained closed — in New Orleans and Gulfport, Miss. — with storm-related delays reported at Hartsfield-Jackson Atlanta International Airport.

Some flights were restored to cities in the Gulf Coast region where service was canceled a day earlier, but there were indications that flight disruptions would last into the Labor Day weekend.

Delta, a major carrier to the area with its headquarters in Atlanta, canceled flights in Louisiana, Mississippi, Alabama and Florida because of the hurricane, while Continental Airlines called off 55 flights in the region.

United scrubbed all 28 flights into and out of New Orleans through tomorrow, and spokesman Jeff Green said the cancellations could go into the holiday weekend. Conditions at the airport had worsened, he said, with water continuing to rise and no power available, leaving even runway lights out of commission.

US Airways canceled New Orleans flights through Saturday morning as well as flights from Jackson, Miss., and Mobile, Ala., through this morning.

Northwest restored service to nine of the 12 Southeastern cities where it was suspended on Monday, but the carrier still canceled 21 flights yesterday because of Katrina.

American Airlines, a unit of AMR Corp. and the nation’s No. 1 carrier, said it did not know when it would resume service on its 36 daily flights into and out of New Orleans, although sister carrier American Eagle was resuming flights into Baton Rouge, La., and Pensacola and Fort Walton Beach, Fla.

Southwest Airlines Co. canceled plans to resume service to Jackson, citing lack of power, backup power and water, and said New Orleans flights won’t resume until tomorrow at the earliest.

Katrina could force airlines’ fuel costs still higher, although analysts said it is not clear how high.

Mr. Heimlich, chief economist for the Air Transport Association, said jet fuel prices averaged $1.88 per gallon as of last week, up more than 80 percent from $1.03 in January 2004. With every penny increase costing U.S. airlines approximately $190 million, that increase translates to $16 billion in increased fuel expense for the industry.

In addition to skyrocketing costs, he said, airlines increasingly face a problem with tight supplies that has caused “a growing commercial challenge and frustration at a number of airports.”

“That doesn’t mean airlines have been forced to cancel flights, but the logistics required to maintain adequate jet fuel supplies nationwide is unprecedented,” he said in the report issued Thursday.

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