Jet-fuel costs have skyrocketed. Recession-wary travelers are opting not to fly. And as if those financial pressures weren`t enough, America`s commercial airlines are facing the fact that they have to replace an increasingly aging fleet of airplanes.
At the beginning of 1990, the combined fleets of the nation`s 12 largest airlines-about 3,200 aircraft-averaged nearly 12 years of age, about three years more than the average age of the combined fleets of Western Europe`s airlines.
Some carriers, such as Chicago`s Midway Airlines and struggling Pan American World Airways and Trans World Airlines, had fleets that averaged more than 15 years old at the beginning of the year.
Such statistics raise not only the question of safety but also that of whether the airlines can continue to compete domestically and internationally. ”The age of the U.S. airline fleets isn`t a totally accurate barometer of the industry`s health, but it is a contributing factor, and the fact that our fleet overall has been getting older with each passing year is
disturbing,” said Mark Bobbie, senior aerospace analyst for Forecast International, a Connecticut-based marketing research and consulting firm.
Because industry deregulation has created a greater need among the airlines for more planes to fly new and expanded routes, the airlines are tending to hold onto their aircraft longer. In addition, the leveraged buyout and merger mania of the 1980s caused airlines, like other industries, to make maximum use of their credit, so many have run out of the capital or credit needed to buy new airplanes, analysts say.
But older airplanes, like older automobiles, have become less fuel-efficient and require increasingly more maintenance. This, in turn, helps drive up air fares for travelers and cuts into profits for airline companies, analysts point out.
Older airplanes also are noisier and, according to federal regulators, may be less safe, though aviation experts contend an aircraft`s safety depends more on how well it`s maintained and how many times it takes off and lands than on chronological age.
So, U.S. airlines are under increasing pressure from consumers, their stockholders, airports and the government to replace their aging stock.
With few exceptions, only financially healthy carriers can afford the hundreds of millions of dollars it costs to buy large numbers of new aircraft. The average cost of a new jet airliner is around $60 million, according to Avmark Inc., an aviation consulting firm based in Arlington, Va.
So, though such cash-rich giants as American Airlines and Chicago-based United Airlines can hurl contracts at aircraft manufacturers, cash-starved and credit-poor carriers such as Eastern, Pan Am, Continental and TWA, for the most part, have to make do with their dinosaurs.
That means the large competitive gap between the Americans and Uniteds and the weaker carriers undoubtedly will widen when the former begin receiving their new planes, analysts say.
Moreover, if the financially draining effects of the recession and oil crisis don`t end soon, airlines unable to afford to upgrade their fleets will almost certainly face extinction, the analysts say.
”It`s deadly when you can`t replace your fleet,” said Frank Cassell, professor emeritus of industrial relations at Northwestern University`s Kellogg Graduate School of Management and an airline industry expert. ”You can`t compete. New airplanes are cheaper to operate, and they attract more passengers. Rightly or wrongly, people associate new planes with safety.”
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The gap in new aircraft orders between the haves and have-nots is wide.
American, the nation`s largest carrier with about 500 airplanes, has firm orders for 224 new planes and options to buy about 200 more, according to Forecast International.
United has firm orders for 289 new planes and options for almost an equal number to upgrade its fleet of 455 airplanes. It recently gave a record-breaking $22 billion order to the Boeing Co. for 35 Boeing 777s, the aircraft manufacturer`s newest long-range, widebody jet.
Delta Air Lines and Northwest Airlines, two other relatively successful carriers, have firm orders for 139 and 173 new planes, respectively. Atlanta- based Delta expects to receive the first deliveries of McDonnell Douglas Corp.`s new, three-engine, 350-passenger MD-11 jumbo jet by year-end.
On the other hand, Eastern, which is operating under bankruptcy protection from its creditors, and financially troubled Pan Am, which Friday expressed an interest in taking up TWA`s merger offer, have no new aircraft on order.
Continental, which recently filed for bankruptcy, has firm orders for only 10 planes and options for 10 more, according to Forecast. And TWA, which recently agreed to sell its lucrative U.S.-London routes to American to stay afloat, has only 20 planes on order and options to purchase another 20.
And so it is that the airlines most in need of new aircraft are least able to afford it, and have, on average, some of the oldest fleets in the industry.
According to Avmark, TWA`s 213 aircraft at the beginning of this year averaged 15.4 years of age. Pan Am`s fleet of 158 airplanes averaged 15.3 years of age. Eastern`s fleet of 191 aircraft averaged 13.9 years of age, and Continental`s 313 planes averaged 12.4 years.
Financially strapped Midway Airlines had the oldest fleet on average Jan. 1, according to Avmark. The average age of its 61 planes was 16 years. Since then, however, the regional airline, despite its cash-flow problems, has replaced almost 15 percent of its fleet with new planes.
According to Midway spokeswoman Laura Poulesney, the airline this year took delivery of nine new ”quieter and more fuel-efficient” McDonnell Douglas MD-80s and retired all 10 of its aging Boeing 737s and four of its older DC-9-15s.
In addition, according to Avmark, Midway has firm orders for more than 20 additional new jets and options on nearly 40 more. More of the airline`s older planes will be phased out when Midway closes its Philadelphia hub Jan. 8, Poulesney said.
Unless U.S. airlines make a concerted effort to upgrade, they may have foreign carriers taking their business away from them, Cassell said.
”It happened to the steel and microchip industries when they failed to upgrade their capital stock, so who`s to say that it can`t eventually happen to the airlines,” Cassell said.