Flight Cancellations on Record Pace (AMR, UAL, LCC, DAL, RJET, JBLU, LUV, ALK, HA)

Not only is air travel getting more expensive, passengers are more likely to face competition for fewer seats and more cancelled flights. Capacity is falling as airlines eliminate low-traffic routes and cancelled flights are on a path to exceed 2% of all scheduled flights this year.

Large carriers including AMR Corp. (NYSE: AMR), United Continental Holdings Inc. (NYSE:UAL), and Delta Air Lines Inc. (NYSE: DAL) have cancelled nearly 104,000 flights so far this year according to Bloomberg. And statistics from the US Bureau of Transportation Statistics (BTS) and other federal agencies show that no airline is immune. Southwest Airlines Co. (NYSE: LUV), Republic Airways Holdings, Inc. (NASDAQ: RJET), JetBlue Airways Corp. (NYSE: JBLU), US Airways Group, Inc. (NYSE: LCC), and Alaska Air Group Inc. (NYSE: ALK) all cancel at least some flights regularly. Only Hawaiian Holdings Inc. (NASDAQ: HA) manages to avoid the cancellation bug, probably due more to the balmy Hawaiian weather than anything else.

In July, the last month for which the BTS has data, 1.7% of scheduled flights to all airports were cancelled. That’s 9,232 out of 547,219 scheduled flights. The worst performer was AMR’s American Eagle regional service, with a cancellation rate of 3.6% of its flights and 15% of all cancelled flights. Republic’s Frontier Airlines cancelled 3.2% of its flights to all airports. Expressjet, which operates regional planes for United and Continental, cancelled 2.8% of flights, while United on its own scrubbed 2.5% and Continental cancelled another 0.5%. Delta, and its regional partner Skywest, cancelled 0.9% and 2.7% of flights, respectively.

Many of the cancellations are due to weather and others to mechanical problems. Others are due to possible delays on the tarmac that now generate fines if the delay is more than three hours. By cancelling the flight, the airlines avoid the fines.

A more interesting chart from the BTS data shows the number of regularly scheduled flights that are cancelled 5% or more of the time. American Eagle again leads here, with nearly 30% of its 1,350 regularly scheduled flights routinely cancelled. Most of those cancellations are almost certainly due to lack of passengers. Frontier routinely cancels nearly 20% of its flights and American cancels 15% of its flights.

As the airlines continue to fight off rising fuel costs and fewer customers due to the weak economy, the companies eliminate more flights and try to put more passengers on the remaining flights. Regional carriers are particularly susceptible to lower passenger numbers on flights from one small city to another.

Airline stocks have fallen in the first hour of trading today as well, as the companies close out what has been a miserable quarter. AMR’s shares are down more than -40% for the quarter and US Airways’ shares are off more than -30%. United shares are down nearly -10% and Delta shares are off about -14%. Among smaller carriers, Republic’s shares are down about -45% in the quarter and JetBlue shares are off about -30%. No airlines has posted a gain for the quarter and for the past 12 months, only Alaska has managed to raise its share price. The others are off anywhere from -10% to more than -60%.

United shares are off nearly -3.5% this morning, at $19.81, in a 52-week range of $15.92-$29.75. Delta shares are down more than -1.6%, at $7.82, in a 52-week range of $6.41-$14.54. AMR’s shares are off more than -1.5%, at $3.09, after setting a new 52-week low this morning of $3.04 against a 52-week high of $8.98.

Paul Ausick