August 2006
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National News Airlines post first profitable quarter
U.S. airlines are poised to report their first profitable quarter since 2000 thanks to strong travel demand, cost-cutting and disciplined management of capacity. Yet a Wall Street analyst suggested that the struggling sector has hit a peak for investment, driving down share prices. However, Calyon Securities analyst Ray Neidl said he remains bullish on American, Continental and Southwest airlines and the industry in general. His reason: strong demand and the airlines' ability to raise fares.
Testifying before the State Department's Advisory Commission on Public Diplomacy Wednesday, Roger Dow, president and CEO of the Travel Industry Association, encouraged commissioners to recognize travel and tourism as an untapped vehicle for improving America's image around the globe. "By bringing more visitors to our country, we can share what makes our nation great—its people, energy and way of life. Making America the international destination of choice is good diplomatic policy," Dow advised the commission.
High gasoline prices may dent economic growth, but consumers' fuel appetite is still strong. Those trends are likely to persist, experts said, as average nationwide pump prices approach $3 a gallon—a threshold once feared to be disastrous for motorists and potentially the economy. Citigroup Smith Barney senior economist Steven Wieting said the conventional wisdom that $3 a gallon was some kind of tipping point "has been largely overstated."
The airline industry has long had its upstart, low-cost, no-frills carriers. Now the bus industry has one serving eight Midwestern cities for as little as $1.50 a ride. With visions of becoming the Southwest Airlines of the bus business, megabus.com, a unit of Stagecoach Group's Coach USA, is offering riders who are willing to wait on street corners trips between Chicago and Cleveland, St. Louis, Cincinnati, Indianapolis, Minneapolis and Detroit. Targeting motorists who are weary of $3-a-gallon gasoline and congested highways, megabus.com has attracted 73,000 riders since it launched operations in April. Passengers book seats online on a first-come, first-served basis, and prices vary depending on availability, destinations and departure time
O'Hare International Airport in Chicago was the nation's busiest in terms of air traffic during the first half of 2006, surpassing Atlanta's airport, according to the FAA. O'Hare registered 477,001 flights, down 1.3 percent from last year but still enough to lead the list, according to the FAA.
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