AVIATION INDUSTRY PERFORMANCE 

A Review of the Aviation Industry in 2008 

Number: CC-2009-039 

Date Issued: May 6, 2009 

 
U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

Subject: INFORMATION: Aviation Industry Performance 

A Review of the Aviation Industry in 2008 

Date: May 6, 2009 

From: David A. Dobbs 

Deputy Inspector General 

Reply to 

Attn. of: J-2 

To: The Secretary 

Acting Federal Aviation Administrator 

Acting Assistant Secretary for Aviation and International Affairs 

This report provides a comprehensive analysis of aviation industry trends in 20081

and their impact on aviation system performance, demand and capacity for 

domestic and international flights, and air service in small communities. 2

 

Unprecedented fuel prices in the first three quarters of 2008 followed by a 

worsening global economic recession drastically impacted the airline industry, 

with $5.8 billion3

 in operating losses for the year and multiple bankruptcies. 

Airlines responded to the dramatic shift in their operating environment by cutting 

flights, raising airfares, and tapping into ancillary sources of revenue. As a result 

of these trends, domestic passenger traffic (measured in Revenue Passenger Miles, 

or RPM)4

 declined by approximately 10 percent in the fourth quarter of 2008, 

compared to the fourth quarter of 2007. Preliminary data on international 

passenger traffic to and from the United States indicate a 7-percent decline in the 

last 3 months of 2008 after having grown by 5 percent in the first half of the year. 

One positive outcome of reduced service and ridership in the second half of 2008 

was fewer flight delays and improved on-time performance. 

Airlines anticipate further declines in domestic and international passenger 

demand as a result of the ongoing economic downturn. Consequently, they have 

 

1

 Unless otherwise specified, all data presented are on a calendar-year basis. 2

 This report is the 10th in a series of periodic updates on aviation industry trends issued by our office. The 

performance metrics are based on data collected and processed by the Department of Transportation’s Office of 

Aviation Analysis, Bureau of Transportation Statistics, Office of Airline Information, and Federal Aviation 

Administration. OIG reports are available on our website: www.oig.dot.gov. 3

 Operating performance for leading network, low-cost, and regional airlines. See exhibit A for complete list of 

airlines included in this analysis. 4

 See exhibit C for a glossary of commonly used terms, including Revenue Passenger Miles (RPMs). 

CC-2009-039 i
announced further service reductions in 2009 and have resorted to lowering 

airfares to stimulate demand until those capacity cutbacks can be implemented. 

Airlines Reduced Flights, Raised Airfares, and Introduced New Fees in 2008 

In response to the worsening economy, volatile fuel prices, and the resulting 

operating losses in 2008, airlines took aggressive measures to generate operational 

savings. By November 2008, airlines had implemented capacity cutbacks that 

eliminated roughly 13 percent of domestic scheduled flights and associated seat 

miles compared to November 2007. These measures significantly affected air 

service and airports of all sizes across the country and brought the number of 

scheduled flights down to levels last seen in 2002. 

To achieve savings through service cuts, airlines grounded approximately 

376 aircraft5

 systemwide—mainly the less fuel-efficient models in their fleets—

and laid off about 37,000 airline employees. Non-stop service in domestic longdistance markets also declined as airlines started routing these passengers on 

connecting flights through their hub airports. 

From the beginning of 2008 through the July 2008 peak in fuel prices, airlines 

initiated several fare increases. Average airfares increased between 9 percent and 

16 percent in the third quarter of 2008, compared to the third quarter of 2007, 

depending on the length of the flight (see table A). The average all-inclusive price 

of air travel increased further as airlines began charging fees for ancillary services 

such as checking bags, selecting seats, and using on-board pillows and blankets. 

Table A. Airfares by Flight Length 

Flight Length Average Airfares 

(Average Distance) 3Q 2008 3Q 2007 Change

Short (≈ 300 miles) $142 $122 16% 

Medium (≈ 1,000 miles) $183 $168 9% 

Long (≈ 1,500 miles) $232 $208 11% 

Source: Department of Transportation 

Note: Airfare data do not include fees for checked bags and other 

ancillary services. 

Reduced Service Options Resulted in Diminished Service to Small 

Communities 

Air service to small communities came under a lot of pressure during 2008. 

Airlines operating scheduled air services to small communities were either forced 

to eliminate the smaller aircraft from their fleets or ceased flight operations 

altogether due to the financial strain put on them by high fuel prices and operating 

 

5

 Includes aircraft grounded by network, low-cost, and regional carriers. See exhibit A for complete list of airlines 

included in this analysis. 

CC-2009-039 ii
losses. While few communities lost all air service due to the cuts in scheduled 

flights, many small- and medium-sized communities saw a reduction in their 

access to hub airports. However, only 76 of all 667 of the Nation’s airports 

receiving scheduled air service lost more than half of the air carriers serving their 

communities. 

Small community (non-hub) airports saw the biggest impact, with a 16-percent 

decline in available seats for nonhubs,6

 compared to an 11-percent 

nationwide decline. From a 

regional perspective, non-hub 

airports in the Northeast and 

Midwest lost the highest 

percentages of available seats as 

shown in figure A. The reduction 

in scheduled flights also affected 

some large airports, which lost a 

high percentage of flights as 

airlines downsized their secondary 

hubs. For example, Los Angeles 

International, Cincinnati, Kansas 

City, and Oakland saw declines in 

their domestic departures of between 25 and 30 percent. 

Figure A. Regional Changes in 

Available Seats at Non-Hub Airports, 

Nov. 2008 vs. Nov. 2007 

Source: Federal Aviation Administration

West 

-14% 

Midwest 

-23% 

Northeast

-29% 

South 

-11% 

Overall, 54 small communities lost all air service at some point in 2008, although 

two-thirds of those only lost service temporarily during a transition from one 

Essential Air Service (EAS) carrier to another. The EAS program, which 

guarantees air service to eligible small communities, experienced many challenges 

in 2008 when key EAS contracting carriers decided to either cease operations or 

reduce the number of small (18 seat) aircraft in their fleets. 7

 

A significant increase in the number of communities vying for replacement air 

service along with a reduction in the number of airlines willing to provide this 

service led to lengthy interruptions in service at some airports. As a result, the 

Department of Transportation was forced to negotiate replacement contracts at 

much higher subsidy costs due to higher fuel prices, fewer economically viable 

aircraft, and fewer airlines available to bid on contracts. Consequently, the 

 

6

 Analysis based on FAA classification of airports: Non-hub airports enplane less than 0.05 percent of system-wide 

passengers. Small-hub airports enplane more than 0.05 percent but less than 0.25 percent of system-wide 

passengers. Medium-hub airports enplane more than 0.25 but less than 1 percent of system-wide passengers. 

Large-hub airport enplane more than 1 percent of system-wide passengers. 7

 Air Midwest, Skyway Airlines, and Big Sky Airlines, all of whom provided lift to the EAS program decided to cease 

operations in 2008. Colgan Airlines eliminated most of the 18-seat aircraft from its fleet. 

CC-2009-039 iii
Department expects program costs to increase from $109 million in fiscal year 

(FY) 2008 to $160 million in FY 2009. 

Service Cutbacks and Higher Airfares Caused Decline in Passenger Traffic 

Although airlines were able to save on operating costs through service reductions, 

the cutback in flights also reduced passengers’ service options. This, combined 

with the effect of the economic recession and higher airfares, led to domestic 

passenger traffic declining in the second half of 2008 after remaining relatively 

unchanged in the first half of the year. By the end of 2008, domestic passenger 

ridership (measured in RPMs) declined by approximately 10 percent (compared to 

the fourth quarter of 2007) to the lowest levels since 2004 (see figure B). 

Figure B. Domestic Passenger Traffic, 2008 vs. 

2007 and 2002 (RPMs in Billions) 

25

30

35

40

45

50

55

60

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2002 2007 2008

Source: Bureau of Transportation Statistics

Flight Delays Declined Significantly Following Reduced Flight and 

Passenger Activity 

The record rate of flight delays in 2007 continued into the first 6 months of 2008 

but fell to 22 percent in the last 6 months as airlines began cutting scheduled 

flights (compared to 27 percent in 2007). However, we identified six larger, more 

congested airports that continued to see above-average rates of delays toward the 

end of 2008—ranging from 27 to 37 percent—compared to the average rate of 

21 percent for the remaining 49 airports tracked by the Federal Aviation 

Administration (FAA). Below, figure C shows the trend of delay rates for all 

55 FAA-tracked airports, and figure D shows the 2008 rate of delays at the 

6 larger airports.8

 Finally, the average length of a delayed flight in the second half 

of 2008 did not improve from the second half of 2007 and remained at 55 minutes. 

 

8

 FAA tracks the number and rate of flight delays at 55 airports across the National Airspace System. 

CC-2009-039 iv
CC-2009-039 v

Figure C. Rate of Delayed Flights at 

55 Major Airports, 2008 vs. 2007 and 2002 

Figure D. Rate of Delayed Flights at 

Congested Airports, 4th Quarter 2008

0%

10%

20%

30%

40%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2002 2007 2008

0% 10% 20% 30% 40%

New York - Newark

New York - JFK

Miami 

San Francisco

Atlanta

Source: Federal Aviation Administration Source: Federal Aviation Administration

At the request of the House Subcommittee on Aviation, our office recently 

initiated an audit that will: 

• evaluate further the impact of airline decisions to reduce flight schedules on 

the delays and performance of the National Airspace System, 

• analyze the delay problem specifically in the New York region and its 

corresponding effect across the country, 

• examine progress in implementing the 77 initiatives emphasized by the New 

York Aviation Rulemaking Committee for reducing delays in New York, and 

• highlight impacts from airline changes on travelers and airports. 

We expect to report our results later this year. 

New York Laguardia

Average rate for the other 49 airports 

tracked by the FAA (21 percent)
1

TABLE OF CONTENTS

IMPACT OF FUEL CRISIS AND ECONOMIC RECESSION 

ON AIRLINES’ FINANCIAL CONDITION.................................... 1 

MEASURES IMPLEMENTED BY AIRLINES HAVE 

IMPACTED AIR SERVICE ACROSS THE NATIONAL 

AIRSPACE SYSTEM......................................................................... 4 

AIRLINE SERVICE CUTS, HIGHER AIRFARES, AND 

CONCERNS OVER THE ECONOMY ALSO LED TO A 

DECLINE IN AIR TRAFFIC..................................................... 12

CUTBACKS IN SCHEDULED FLIGHTS ALSO LED TO 

FEWER FLIGHT DELAYS AND CANCELLATIONS...................... 16 

EXHIBIT A. SCOPE AND METHODOLOGY.............................. 19 

EXHIBIT B. LIST OF FIGURES AND TABLES .......................... 22 

EXHIBIT C. GLOSSARY OF COMMONLY USED TERMS........... 24 

EXHIBIT D. MAJOR CONTRIBUTORS TO THIS REPORT.......... 27 

CC-2009-039 
1

IMPACT OF FUEL CRISIS AND ECONOMIC RECESSION ON 

AIRLINES’ FINANCIAL CONDITION 

During the second half of 2008 the aviation industry faced an extremely 

challenging economic environment. A deepening economic recession led to an 

increasingly uncertain revenue outlook for the industry as passengers altered their 

demand for air services. The present crisis was preceded by a dramatic shift in the 

industry’s operating costs as fuel prices soared to unprecedented highs in the first 

half of 2008. The combined impact of the high price of fuel followed by the 

downturn in the economy led to multiple bankruptcies, service cessations, and a 

general deterioration of the airline industry’s creditworthiness.

Jet Fuel Prices Surged in the First Half of 2008 Before Normalizing in 

the Second Half in Response to the Global Economic Crisis 

During the first half of 2008, jet fuel prices surged to historical highs, peaking in 

July at an average price of $3.89 per gallon, an 81-percent increase over July 2007 

(see figure 1 below). Fuel prices normalized in the second half of the year, 

declining to an average price of $1.26 per gallon by February 2009. 

Figure 1. Jet Fuel Prices, Jan. 1998 through Feb. 2009 

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Avg. price 

$3.89/gallon 

July 2008 

Avg. price

Avg. price

$1.26/gallon 

February 2009

$2.14/gallon 

July 2007 

U.S. Gulf Coast Spot Price

($/gallon)

Source: Energy Information Administration 

According to data reported by airlines to the Bureau of Transportation Statistics 

(BTS) airline fuel costs increased by $16.5 billion during the first three quarters of 

2008. As a result, fuel costs accounted for roughly 37 percent of the industry’s 

operating costs and actually replaced labor as the largest component of the 

industry’s cost structure. The increase in fuel cost per available seat mile (CASM) 

more than eliminated any other operating cost savings that many airlines had 

achieved by restructuring their operations after the September 11, 2001, terrorist 

attacks. 

The Energy Information Administration (EIA) projects that future fuel prices will 

be driven mainly by the depth and duration of the global economic downturn, the 

CC-2009-039 
2

pace and timing of the recovery, and the supply of crude oil. The EIA is 

forecasting that fuel prices will continue to be depressed in 2009 in response to 

continued softness in the demand for crude oil resulting from the ongoing global 

economic recession. Prices are forecasted to begin rebounding in 2010, following 

a global economic recovery. 

Airlines Suffered Significant Losses as Airfare Revenues Did Not 

Keep Up With Increasing Fuel Costs and Air Travel Declined 

The increases in fuel prices and the economic recession impacted all components 

of the aviation industry—both major network and low-cost carriers—and affected 

airlines’ cash flow and creditworthiness. 

Overall, in 2008, the industry reported operating losses totaling $5.8 billion. Of 

this amount, airlines incurred: 

• $4.4 billion in the first three quarters of 2008. This was due to high fuel prices 

and aggressive fuel hedging9

 by certain airlines, which resulted in airlines 

struggling to recoup rising operating 

costs through higher airfares. 

• $1.4 billion in the fourth quarter of 

2008, when passenger traffic began 

waning as a result of the global 

economic crisis. 

As a result of these heavy losses, 

10 carriers sought bankruptcy protection, 

and 11 carriers ceased all flight 

operations.10 Prior to the fourth quarter of 

2007, the industry had experienced six 

consecutive quarters of operating profits 

totaling $11.8 billion (see figure 2). 

Figure 2. Airline Operating Revenue vs. 

Expenses ($ in Billions)

Source: Office of Secretary of Transportation – Airline 

Quarterly Financial Review 

$10

$15

$20

$25

$30

$35

$40

$45

3Q011Q02

3Q021Q033Q031Q04

3Q04

1Q053Q051Q063Q061Q07

3Q071Q083Q08

Operating Revenues Operating Expenses

4Q08 

Expenses

$32.7 billion

4Q08 

Revenues 

$31.3 billion

Impact on Major Network Carriers 

American, United, US Airways, and Continental reported operating losses of 

$2.1 billion, $1.7 billion, $1.8 billion, and $378 million, respectively, in 2008. 

Further, Northwest reported a loss of $541 million before its merger with Delta in 

October 2008. Delta was the only network carrier to report an operating profit in 

2008 ($56 million) as shown in figure 3 below. Delta’s operating performance 

 

9

 “Fuel hedging” is a contractual tool used by some airlines to stabilize jet fuel costs. A fuel hedge contract commits 

an airline to paying a pre-determined price for future jet fuel purchases. Airlines enter into such contracts as a bet 

that future jet fuel prices will be higher than current prices or to reduce the turbulence of confronting future expenses 

of unknown size. If the price of jet fuel falls and the airline hedged for a higher price, the airline will be forced to pay 

an above-market rate for jet fuel. 10 Eight of the airlines that ceased operations did so after attempting to restructure under bankruptcy protection. 

CC-2009-039 
3

was bolstered by its emergence from bankruptcy in April 2007, which allowed it 

to streamline operating costs. Delta also benefited by shifting capacity into 

growing international markets. 

Impact on Low-Cost Carriers Figure 3. Select Carrier 2008 

Operating Profit/Loss ($ in Millions) Low-cost carriers’ operating performance varied 

as shown in figure 3. For instance, Southwest 

Airlines reported operating profits totaling 

$449 million for 2008. JetBlue also reported an 

$85 million operating profit in 2008, while 

Frontier and AirTran reported operating losses 

of $87 million and $72 million respectively. 

(72)

(2,054)

(378)

(87)

(541)

(1,747)

(1,773)

(23)

(3,000)

(2,000)

(1,000)

56

85

449

0 

1,000

AirTran

Alaska

American

Continental

Delta

Frontier

JetBlue

Northwest

Southwest

United

US Airways

Source: Department of Transportation. 

a

 Includes operating results for Northwest from 

October 30 through the end of 2008 due to merger. 

b Financial results through October 29, 2008.

Impact on Airlines’ Cash Flow and 

Creditworthiness 

Higher fuel prices in the first three quarters of 

2008 followed by significant declines in 

passenger traffic put a lot of pressure on airlines’ 

cash positions. Many were forced to borrow, by 

committing unencumbered assets and other 

forms of collateral, to maintain adequate levels 

of cash to support operations (see figure 4 

below). 

Although the cash raised by the airlines did improve the industry’s liquidity in the 

short run, it deteriorated to roughly 

15.6 percent by the end of 2008.11 

Meanwhile, industry leverage saw 

a sharp deterioration between the 

second quarter of 2007 and the 

fourth quarter of 2008. The 

deterioration in airlines’ liquidity 

and leverage positions affected the 

industry’s overall creditworthiness 

as the debt ratings for most airlines 

(including Southwest Airlines) 

were downgraded during 2008. 

Figure 4. Industry Liquidity and Leverage 

 

11 A decline in a carrier’s liquidity ratio indicates that it has less cash available to support its ongoing flight operations. 

Historically, larger airlines often filed for bankruptcy when liquidity approached or dipped below 15 percent. 

Source: Security and Exchange Commission 

Note: Total liquidity defined as total available cash (cash + short 

 term investment + balance available to be borrowed under 

 a revolving line of credit)

15.6%

18.8%

23.9%

21.5% 20.3%

22.7%

25.4%

 12.39x 

 3.02x 

 2.14x 1.85x 1.40x 1.30x 1.47x

0%

5%

10%

15%

20%

25%

30%

Q2 '07

Q3 '07

Q4 '07

Q1 '08

Q2 '08

Q3 '08

Q4 '08

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Liquidity Leverage

Total Liquidity/Revenues

Total Debt/Total Equity

 

 a 

 b 

CC-2009-039 
4

Considering current market conditions, the scarcity of unencumbered assets, and 

the industry’s deteriorating creditworthiness, raising capital in the near future, if 

necessary, will be a daunting task for airlines. 

MEASURES IMPLEMENTED BY AIRLINES HAVE IMPACTED AIR 

SERVICE ACROSS THE NATIONAL AIRSPACE SYSTEM 

During the fall of 2008, airlines responded to the fuel crisis and economic 

recession by cutting flights and costs, raising fares and tapping into ancillary 

sources of revenues. By November 2008, airlines had implemented capacity 

cutbacks that eliminated roughly 13 percent of domestic scheduled flights and 

associated seat miles compared to November 2007. The biggest impact of the 

service reductions was seen in the form of reduced frequencies between many 

small- and medium-sized communities and their connecting hubs and a decrease in 

non-stop service in domestic, long-distance markets as airlines started routing 

passengers through their hub airports. These measures significantly affected 

airports and aircraft of all sizes and brought the number of scheduled flights to its 

lowest levels in the last 9 years. 

Many airlines operating scheduled air services to small communities were either 

forced to eliminate the smaller aircraft from their fleets or ceased flight operations 

altogether due to the financial strain put on them by high fuel prices. Passenger 

demand is expected to continue to slide in 2009. Consequently, airlines 

announced further reductions in flights and have resorted to lowering airfares in an 

effort to stimulate demand until the new capacity cuts are implemented. This will 

further reduce air service across the National Airspace System as well as service to 

small communities. 

Airline Capacity Cutbacks 

In September 2008, airlines began cutting capacity. Data for the last 3 months of 

2008 show a 10.7-percent decline in year-over-year available seat miles (ASMs). 

These cuts brought capacity down 

to levels last seen in 2002 when 

the industry was still recovering 

from the September 11, 2001, 

terrorist attacks (see figure 5). 

Legacy carriers recorded the 

deepest cuts in domestic air 

service during the fall of 2008. 

Between November 2007 and 

November 2008, six of seven 

legacy carriers cut domestic 

flights between 13 and 17 percent 

Figure 5. Changes in Domestic Capacity, 

2008 vs. 2007 and 2002 (ASMs in billions) 

40

45

50

55

60

65

70

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2002 2007 2008

Source: Bureau of Transportation Statistics 

CC-2009-039 
5

(see figure 6).12 Only Northwest Airlines remained relatively unchanged. The 

low-cost carriers, as a group, registered approximately a 4-percent reduction in 

flights, with most individual carriers reporting only single-digit declines in flights; 

however, Spirit Airlines cut domestic flights by 11 percent. 

Figure 6. Change in Scheduled Flights for Legacy and 

Low-Cost Carriers, Nov. 2008 vs. Nov. 2007

-3%

-7%

-13% -14%

-15% -17% -17%

-11%

-13%

-6%

-2% -1%

-20%

-15%

-10%

-5%

0%

Northwest

Southwest

JetBlue

Frontier

Airtran

Spirit

US Airways

Continental

United

Alaska

Delta

American

Source: Federal Aviation Administration

Airline Cuts in Long-Distance Service 

Airlines cut service in markets of all distances. However, flights in long-haul 

markets experienced the greatest decline (see figure 7 below). Although more 

convenient for passengers, long-haul, non-stop flights were cut to save operating 

costs. Airlines accommodated affected passengers by connecting them through 

hub airports. The loss of service in some long-haul markets also reflects the 

decision of ExpressJet Airlines to terminate its short-lived attempt to start service 

under its own brand to link long-haul markets between medium-sized cities. 

Figure 7. Change in Scheduled Flights by 

Flight Distance, Nov. 2008 vs. Nov. 2007 

(Distance in Miles)

-13%

-12% -12% -13%

-17% -17% -20%

-10%

0%

0 to 249

250 to 499

500 to 999

1,000 to 1,499

1,500 to 2,499

2,500 to 7,000

Source: Federal Aviation Administration

 Short-Haul Medium-Haul Long-Haul 

 

12 This analysis is based on the airlines’ branded system, including regional airline flights operated under the brand of a 

network airline. Legacy and low-cost carriers are defined in exhibit C. 

CC-2009-039 
6

Impact of Airline Cutbacks on Aircraft Usage 

The cutbacks in scheduled air service affected aircraft of all sizes except regional 

jets in the 71- to 100-seat category. Domestic scheduled flights on all other 

aircraft experienced doubledigit declines in November 

2008 as compared to 

November 2007 (see figure 8). 

However, scheduled flights 

using 71- to 100-seat regional 

jets were up 29 percent yearover-year. The growth of the 

larger regional jets reflects the 

relatively recent introduction 

of aircraft in this size class and 

a strategic choice by airlines to 

use these fuel-efficient aircraft 

to serve markets that were 

previously serviced by older narrow body jets, which were less fuel efficient. 

Figure 8. Change in Scheduled Flights by 

Aircraft Size, Nov. 2008 vs. Nov. 2007

-23%

-15% -17% -15% -16%

-11%

29%

-30%

-15%

0%

15%

30%

45%

Piston

Turboprop

Regional Jet 35-70

Regional Jet 71-100

Jet 101-170

Jet 171-250

Jet 251-300

Source: Federal Aviation Administration 

Note: Number ranges in figure 8 represent number of seat 

ranges for that aircraft.

Impact of Airline Cutbacks at Major Airports 

All major airports experienced a decline in domestic service between November 

2007 and November 2008. For example, large airports in Atlanta, Denver, 

Detroit, Washington, D.C., Newark, and San Francisco experienced declines 

ranging from 2 percent to 5 percent, in scheduled flight activity. Conversely, large 

airports in Los Angeles, Cincinnati, and Oakland reported reductions in flight 

activity of 22 percent, 27 percent, and 28 percent, respectively (see figure 9 

below).

CC-2009-039 
7

Figure 9. Capacity Changes at Major Airports, 

November 2008 vs. November 2007 

-30% -20% -10% 0% 10%

 Atlanta

 Baltimore

 Boston 

 Charlotte 

 Cincinnati 

 Cleveland

 Dallas

 Denver 

 Detroit 

 Ft. Lauderdale

 Honolulu 

 Houston 

 Kennedy

 LaGuardia

 Las Vegas

 Los Angeles

 Miami 

 Chicago Midway

 Minneapolis

 Newark 

 Oakland

 Chicago O`Hare 

 Orlando 

 Philadelphia 

 Phoenix 

 San Diego 

 San Francisco 

 Salt Lake City 

 Seattle

 Tampa 

 Washington Dulles 

 Washington Reagan 

Scheduled Flights Available Seats

 Source: Federal Aviation Administration 

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8

Regional Impact of Airline Cutbacks 

A comparison of available seat capacity between November 2007 and November 

2008 reveals an 11-percent decrease in available seats nationally, which was 

spread fairly evenly across the Nation’s regions. However, the western and 

midwestern regions saw slightly deeper losses in percentages of available seats 

(see figure 10). 

• The western region’s 13-

percent decline in capacity 

was due in part to changes in 

service to and within 

Hawaii—which was impacted 

by the bankruptcy and closure 

of Aloha Airlines—and large 

cuts in service to leisure 

destinations such as Las 

Vegas. 

• The midwestern region’s 14-

percent decline in capacity resulted from the downsizing of Delta’s Cincinnati 

hub and cutbacks by other carriers at their hubs in Cleveland and Chicago. 

Figure 10. Regional Changes in Available 

Seats, Nov. 2008 vs. Nov. 2007 

Source: Federal Aviation Administration 

Midwest 

West -14%

-13% 

Northeast South 

-8% -9%

Impact of Airline Cutbacks on Small- and Medium-Sized Community 

Airports 

Although cutbacks in flight schedules affected airports of all sizes, the greatest 

impact was seen at small and non-hub community airports (see figure 11). 

Specifically, on a year-over-year basis, scheduled domestic flights in November 

2008 were down roughly by 10 percent for the large-hub airports, 16 percent for 

medium-hub airports, and 14 percent for both small and non-hub airports (Since 

2000, non-hub airports have seen scheduled flights decline by approximately 

36 percent.) 

Figure 11. Change in Scheduled Departures by 

Size of Community, 2008 vs. 2007 

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Non-hub Small-hub Medium-hub Large-hub

Source: Federal Aviation Administration

CC-2009-039 
9

Yet, overall competition as measured by the number of airlines serving an airport 

did not decline appreciably (see table 1). Only 76 of all 667 of the Nation’s 

airports receiving scheduled air service lost more than half of the air carriers 

serving their communities. 

Table 1. Change in Domestic Competition, 

Nov. 2008 vs. Nov. 2007

Percent Change in 

Carriers Serving 

Airport 

Airports in 

Group 

Average 

Carriers 

Lost 

100% (Lost all carriers) 30* -1.1 

75% - 99% 1* -3.0 

50% - 74% 45* -1.3 

25% - 49% 90* -1.3 

1% - 24% 69* -1.4 

0% (Lost no carriers) 405* 0.0 

Increase in carriers 27* 1.1 

Total 667 

Source: Federal Aviation Administration 

*12 of 30 airports only lost service temporarily during a 

transition to a replacement carrier. 

Drastic Capacity Declines at Small Community (Non-Hub) Airports 

Small community airports (non-hubs) saw the greatest reduction in their available 

seat capacity, with a 16-percent decline in available seats, compared to the 

11-percent decline nationwide. 

Regionally, non-hub airports in the south saw an 11-percent decline in year-overyear available seat capacity, while 

non-hubs in the west saw a decline 

of 14 percent. In the midwestern 

region, available seats at non-hub 

airports declined 23 percent, most 

notably at Peoria and Rockford, 

Illinois, and at Kalamazoo and 

Lansing, Michigan. 

Non-hubs in the northeastern 

region saw the largest impact of 

the capacity cutbacks where yearover-year available seat capacity 

declined by 29 percent. However, 

the significance of this decline is 

tempered by the fact that this 

region also has the fewest number of non-hub airports, which results in a 

magnified percentage decline in available capacity. Within the northeast region, 

Figure 12. Regional Changes in 

Available Seats at Non-Hub Airports, 

Nov. 2008 vs. Nov. 2007 

Source: Federal Aviation Administration

West 

-14% 

Midwest 

-23% 

Northeast

-29% 

South 

-11% 

CC-2009-039 
10

New York’s Stewart Airport lost approximately two-thirds of its available seat 

capacity and accounted for the highest percentage of losses in the entire region. 

Impact on Essential Air Service (EAS) Program 

The EAS program, which guarantees air service to eligible small communities, 

experienced many challenges in 2008 when key EAS contracting carriers decided 

to either cease operations or reduce the number of small (18 seat) aircraft in their 

fleets. This resulted in 37 communities transitioning from one EAS carrier to 

another during 2008. As of the release date for this report, six of these 

communities continue to wait for replacement EAS service. 

The number of communities receiving a subsidy under the EAS program increased 

from 115 in 2001 to 146 in 2008 (see figure 13). During the same period, the EAS 

annual appropriation more than doubled from $50 million to $109 million. 

A significant increase in the number of communities vying for replacement air 

service along with a reduction in the number of airlines willing to provide this 

service led to lengthy interruptions in service at some airports, which forced the 

Department of Transportation to negotiate replacement contracts at much higher 

subsidy costs, given the higher fuel prices. The Department projects subsidy costs 

will increase by 47 percent to $160 million in FY 2009. 

Figure 13. EAS Funding and Participating 

Communities 

Source: Department of Transportation 

* FY 2009 numbers are projections

In Addition to Service and Capacity Cutbacks, Airlines Also Sought 

To Offset Operating Losses by Reducing Their Workforce, Raising 

Airfares, and Introducing New Fees 

Workforce Layoffs 

As a result of the capacity cutbacks, airlines reduced operating costs by paring 

down their workforce. Airlines eliminated approximately 37,000 positions during 

2008, a 7-percent decline from 2007 employment levels (see figure 14 below). 

$0

$20

$40

$60

$80

$100

$120

$140

$160

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

*FY09

0

20

40

60

80

100

120

140

160

Participating Communities

Appropriations ($ millions)

Appropriations Subsidized Communities

CC-2009-039 
11

Figure 14. Aviation-Related Employment for 

US Certificated Carriers (in Thousands) 

529

566 548 540 558 564

591 600

668

400

450

500

550

600

650

700

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: Bureau of Transportation Statistics (BTS) 

American, Continental, and Delta were among the carriers that experienced the 

highest reduction in their workforces during 2008. The industry reached its peak 

employment in 2000 with roughly 668,000 employees. Following the 

September 11, 2001, terrorist attacks, airline employment fell dramatically as 

demand declined and airlines were forced to restructure. By the end of 2006, 

aviation-related employment had declined to roughly 540,000, a 19-percent 

decline from its 2000 peak. Fueled by airline restructurings and increases in 

airline passenger traffic, the industry added jobs in 2007. However, in 2008, after 

fuel prices spiked, airlines began reducing their workforces and fleet sizes to cut 

costs. The recent layoffs placed airline-related employment at levels not seen 

since 1992. 

Fare Increases and New Fees 

Airlines stabilized their revenue outlook by implementing fare increases and fuel 

surcharges and charging fees for ancillary services. From the beginning of 2008 

through the peak of the fuel prices in July 2008, airlines initiated 16 price 

increases. 13 These increases included nine roundtrip fare increases that ranged 

from $4 through $70 and seven roundtrip fuel surcharges that ranged from 

$10 through $40. The price increases resulted in average airfare increases of 

between 9 percent and 16 percent in the third quarter of 2008, compared to the 

third quarter of 2007 (depending on the length of the flight), and played a 

significant role in stabilizing the industry’s revenue outlook (see table A on 

page ii). Airlines also generated revenue by tapping into ancillary sources, that is, 

charging fees for services that were previously included in the price of airline 

tickets (see table 2 below). 

 

13 A price increase represents a fare increase or fuel surcharge implemented by a network carrier that is matched by 

competing network carriers (and often times by major low-cost carriers) on more than two-thirds of their respective 

route networks. Price increases that are not adopted by competing network carriers are usually retracted by the 

carrier proposing the fare increase or fuel surcharge and are not included in this analysis. 

CC-2009-039 
12

Table 2. Summary of Airline Fees 

1st Checked 

Bag 

2nd Checked 

Bag 

Additional 

Bags 

Ticket 

Change Fee 

Seat 

Selection Fee

Air Tran 

Alaska 

American 

Continental 

Delta 

JetBlue 

Midwest Airlines 

Northwest 

Southwest 

Spirit 

United 

US Airways 

Source: Airline web sites 

ERNS 

 ECONOMY HAVE LED TO A DECLINE IN AIR 

ssenger traffic as well as 

general aviation and air cargo flight activity in 2008. 

nger Traffic Declined in 2008, Reaching Levels Not Seen Since 

the year at levels 

slightly lower than those last seen in the fourth quarter of 2004. 

ent, year-over-year increase in the first 

and second quarters of 2008, respectively. 

AIRLINE SERVICE CUTS, HIGHER AIRFARES, AND CONC

OVER THE

TRAFFIC 

Although airlines were able to save on operating costs through service reductions, 

the cutback in flights operations reduced passengers’ service options. This, 

combined with the effect of the global economic recession and increases in air 

fares, led to drops in domestic and international pa

Passe

2004 

Beginning in late summer 2008, domestic passenger traffic (measured in RPMs) 

began shrinking after remaining relatively unchanged in the first half of the year. 

In the fourth quarter of 2008, domestic passenger ridership declined by 

9.6 percent, compared to the fourth quarter of 2007, and ended 

In contrast, international passenger traffic to and from the United States grew 

during the first half of 2008 as airlines moved some of their capacity from their 

domestic service to their international markets. Specifically, international 

passenger traffic saw a 6-percent and 3-perc

CC-2009-039 
13

For the first 9 months of 2008, passenger traffic was up slightly in each of the 

three international regions: Latin America (2.8 percent), Atlantic (3.5 percent), 

and Pacific (1.1 percent). 

Initial signs of softness in international travel began appearing in the third quarter 

of 2008, especially in Latin America where traffic was down 4.6 percent compared 

to the same period in 2007 (see figure 15). International traffic figures for the last 

3 months of 2008 show an accelerated decline, with each of the three international 

regions showing declines of between 4 and 10 percent compared to the fourth 

quarter of 2007. 

Figure 15. International Passenger Traffic 

(Year-Over-Year Change in RPMs)

-15%

-10%

-5%

0%

5%

10%

15%

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

Latin America Atlantic Pacific

Source: Bureau of Transportation Statistics 

System-wide14 passenger enplanement data indicate that passenger enplanements 

declined by 3.7 percent to 741.5 million in 2008, when compared to 2007. This 

marked the first annual decline in 

passenger enplanements since 2002 

and resulted in enplanements 

declining to levels last seen in 2005 

(see figure 16). Enplanements began 

to decline in March 2008 and 

worsened as the year progressed, 

with a decline of 8.5 percent in the 

fourth quarter of 2008 compared to 

the same period in 2007. 

During the third quarter of 2008, the 

major passenger airlines were able to 

fill 82 percent of available seats (actual load factor), a decrease of 1 percent 

compared to 2007 (see figure 17 below). 

Figure 16. System-Wide Passenger 

Enplanements (in Millions) 

739 745 741

770

704

653 641 647

699

500

550

600

650

700

750

800

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: Bureau of Transportation Statistics

 

14 System-wide passenger enplanements include passengers on domestic flights as well as international flights to and 

from the United States. 

CC-2009-039 
14

Figure 17. Load Factors for Select Airlines, 3Q 2008 

Breakeven Load Factor

Actual Load Factor Average Load Factor

Source: Department of Transportation – Airline Quarterly 

Financial Review 

60%

70%

80%

90%

100%

Alaska

American

Continental

Delta

JetBlue

Northwest

Southwest

United

US Airways

82%

90%

However, the average breakeven load factor increased sharply to 90 percent in the 

third quarter (an increase of 12 percent over 2007) due to the increase in fuel 

prices. Preliminary data on the fourth quarter of 2008 show that airlines continued 

to maintain high load factors in the face of weakening demand through the 

implementation of the previously announced capacity cutbacks. Airlines expect 

passenger demand to continue to decline. Consequently, airlines have announced 

plans to further cut capacity and are lowering airfares in an effort to stimulate 

demand until those additional capacity cuts can be implemented. 

Other Flight Activity Across the National Airspace System Declined in 

2008 

In November 2008, flight operations at en route centers were down by 14 percent 

compared to November 2000. This is 

the second biggest decrease in flight 

operations since September 2001 when 

operations declined by 16 percent yearover-year. In December 2008, flight 

operations were 8.6 percent lower than 

the same period in 2000 (see figure 

18). 

Figure 18. Change in En Route Center 

Flight Operations vs. 2000 

-20%

-15%

-10%

-5%

0%

5%

10%

Sep-01

Apr-02

Nov-02

Jun-03

Jan-04

Aug-04

Mar-05

Oct-05

May-06

Dec-06

Jul-07

Feb-08

Sep-08

Source: Federal Aviation Administration 

Dec 08 – 

8.6% decline 

over Dec 00 

CC-2009-039 
15

Declines in General Aviation Activity 

In addition to the downturn in airline operations, the unprecedented fuel prices and 

economic recession also negatively 

affected general aviation activity in 

2008. When compared to 2007, 

instrument controlled (IFR) aircraft 

operations recorded at air traffic 

control towers in 2008 declined by 

9 percent for general aviation and 

5 percent for airlines. Furthermore, 

general aviation operations were 

down by 6 percent in the first half 

of 2008 and 11 percent in the 

second half when compared to the 

same periods in 2007. 

Figure 19. Year-Over-Year Change in Tower 

Activity, 2008 vs. 2007 

-30%

-20%

-10%

0%

10%

20%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Commercial Aviation General Aviation Military

Source: Federal Aviation Administration 

Note: Chart presents IFR flight operations 

Monthly, general aviation IFR 

operations were down as much as 20 percent in November 2008, compared to 

November 2007 (see figure 19). Indicative of the effect of fuel prices and 

economic deterioration on general aviation businesses, the relatively new very 

light jet (VLJ)15 industry also suffered several significant setbacks during 2008. 

VLJ manufacturers Adam Aircraft, Eclipse Aviation, and the leading VLJ 

operator, DayJet, ceased operations late in 2008. 

Declines in Air Cargo Activity 

Domestic air cargo traffic fell by 8.3 percent in the first 9 months of 2008 (see 

figure 20). Overnight delivery 

provider DHL announced that it would 

cease operations in the United States, 

which resulted in the layoff of 

14,900 employees at DHL and 

2 airlines providing lift on its behalf. 

Figure 20. Domestic and International 

Air Cargo Traffic 

(Revenue Ton Miles in Billions) 

International air cargo traffic to and 

from the United States remained 

relatively unchanged in the first 

9 months of 2008 compared to the 

same period in 2007. 

Both domestic and international air 

cargo traffic declined at an accelerated 

 

15 Very Light Jets (VLJs) are a new generation of small, general aviation jet aircraft designed to accommodate 4 to 

6 passengers. 

4.7 4.4 4.8 4.9 5.3 5.3 5.4 5.1

8.6

9.5 10.2 9.6

10.6 10.1 9.9 9.5

3

5

7

9

11

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

Domestic International

Source: Bureau of Transportation Statistics 

CC-2009-039 
16

rate in the fourth quarter in response to the challenging economic environment, 

declining by 18 and 19 percent, respectively, when compared to the fourth quarter 

of 2007. 

CUTBACKS IN SCHEDULED FLIGHTS ALSO LED TO FEWER 

FLIGHT DELAYS AND CANCELLATIONS 

The record rate of flight delays seen in 2007 continued into the first half of 2008. 

In the second half of 2008, the number and rate of flight delays declined 

dramatically. The decline was primarily due to the airlines’ capacity cutbacks 

initiated in the fall and their decision to increase scheduled flight times and turnaround times16 to minimize the ripple effect of delays seen in 2007 and the first 

half of 2008. Despite the improvement in the rate of flight delays, the average 

length of delayed flights remained unchanged. 

Flight Delays Declined Overall in 2008, but Congested Airports 

Continued To See High Levels of Delays, and the Average Length of a 

Delayed Flight Remained Unchanged 

At the 55 airports tracked by FAA, flight delays for the summer of 2008 (June 

through August) declined 17 percent from the unprecedented levels seen in the 

summer of 2007. The improvement occurred as airlines began to trim their flight 

schedules and increase scheduled flight times and turn-around times. For the 

second half of 2008, the number of delays was 24 percent lower than the same 

period in 2007. During the fall of 2008, the number of delays fell to levels not 

seen since 2002 (see figure 21 below). The trend was broken in December 2008 

as arrival delays jumped significantly due to severe weather across the northern 

tier of the United States. 

Figure 21. Delayed Flights at Major Airports, 

2008 vs. 2007 and 2002 (in Thousands) 

0

50

100

150

200

250

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2002 2007 2008

Source: Federal Aviation Administration 

 

16 Turn-around time, adding to the time between the arrival and subsequent departure of an aircraft, provides a buffer to 

absorb arrival delays and minimizes the delay from propagating further into the later flights of an aircraft.

CC-2009-039 
17

Not only did the number of delayed flights improve during the summer of 2008 

but the rate of delays also improved. Flight delays declined to 25 percent during 

the summer of 2008, compared to approximately 29 percent during the summer of 

2007. This improvement continued throughout most of the second half of 2008 

(see figure C on page v). The rate of delayed flights also improved during the last 

6 months of 2008—to approximately 22 percent compared to roughly 27 percent 

during the same period in 2007. The declining rate was aided by the significant 

reduction in flight operations that took place in the second half of 2008 and 

improved weather, except for the winter storms that plagued airport operations in 

December of 2008. 

Of the 55 major airports tracked by FAA, 52 airports saw decreases in year-overyear flight delays during the summer of 2008. Most of the 52 airports saw 

reductions in the 15- to 30-percent range. The three airports that saw the biggest 

percentage reductions were Minneapolis, Pittsburgh, and Salt Lake City (see 

figure 22). Only 3 of the 55 saw little to no change (San Francisco, Honolulu, and 

Newark). 

Figure 22. Change in Rate of Delays at Three Best 

and Worst Airports, Sum. 2008 vs. Sum. 2007 

2% 0%

6%

-38%

-32% -32%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

San Francisco

Honolulu

Newark

Minneapolis/St.Paul

Pittsburgh

Salt Lake City

Source: Federal Aviation Administration

However, delays continued to be a problem during the summer of 2008 at larger, 

heavily congested airports. For example, delays at Newark were up 0.4 percent. 

At Kennedy, LaGuardia, and Chicago O’Hare, delays were down only about 

5 percent each. 

Despite the reduction in the number and rate of flight delays, the average length of 

a delayed flight did not change in the second half of 2008 compared to the second 

half of 2007 and remained at approximately 55 minutes. In fact, the average 

length of a delayed flight increased dramatically in December 2008 compared to 

the same month last year due to inclement weather conditions (see figure 23 

below). 

CC-2009-039 
CC-2009-039 

18

Figure 23. Length of Flight Delays at Major 

Airports, 2008 vs. 2007 and 2002 (in Minutes) 

15

30

45

60

75

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2002 2007 2008

Source: Federal Aviation Administration

Flight cancellations at the 55 airports tracked by FAA were 8 percent lower in 

2008 compared to 2007 and did not match the magnitude of the reductions in 

delays (which were down 13 percent). Figure 24 compares the monthly 

cancellations in 2008 to 2007 and 2002. 

Figure 24. Flights Cancellations at Major 

Airports, 2008 vs. 2007 and 2002 (in Thousands) 

0

5

10

15

20

25

30

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2002 2007 2008

 Source: Federal Aviation Administration
19

EXHIBIT A. SCOPE AND METHODOLOGY 

Data represented graphically in the report were collected from the Federal 

Aviation Administration (FAA), the Bureau of Transportation Statistics (BTS), 

and the Office of Aviation Analyses (OAA). The secondary sources of data were 

the Department of Energy’s (DOE) Energy Information Administration and the 

Securities and Exchange Commission (SEC). FAA, BTS, and OAA are 

organizations within the Department of Transportation. 

We did not systematically audit or validate the data contained in any of the 

databases. However, during previous editions, we conducted trend analyses and 

random checks of the data to assess reasonableness and comprehensiveness. 

When our judgmental sampling identified anomalies or apparent limitations in the 

data, we held discussions with managers responsible for maintaining the databases 

to better understand the data and attempt to resolve the inconsistencies. 

Consequently, we did not perform sufficient tests to draw conclusions or form an 

opinion on the completeness or accuracy of the data sources. 

We met periodically with staff from FAA, BTS, and OAA to discuss data issues 

and obtain feedback on modifications we made to existing data in order to more 

accurately represent industry trends. 

A. Analyses Performed With BTS Data

Financial, traffic, operational statistics, employment, and passenger ticket survey 

information obtained from BTS sources were used in financial and statistical 

analyses of history, trends, employment levels, status and performance of financial 

condition, net profits and losses, debt and investment and load factors. 

1. Air Carrier Financial Statistics. A compilation of financial reports 

submitted by air carriers as required under Title 14 Code of Federal 

Regulations (CFR) Part 241 (Form 41). Scope: all certificated U.S. air 

carriers, from 2000 through the fourth quarter 2008. 

2. Air Carrier Traffic Statistics. A compilation of traffic and capacity reports 

submitted by air carriers as required under 14 CFR Part 241 (Form 41). 

Scope: all certificated U.S. air carriers (passenger and cargo), commuter air 

carriers, and foreign air carriers operating to and from the United States, 

from 2000 through the fourth quarter 2008. 

3. Origin and Destination Survey of Passenger Travel (O&D Survey). A 

compilation of surveyed ticket information submitted quarterly as required 

under 14 CFR Part 241 (Form 41). Scope: 10-percent sample of tickets 

used by passengers, from 2000 through the fourth quarter 2008. 

Exhibit A. Scope and Methodology 
20

B. Analyses Performed With DOT-OAA Data

Financial, traffic, and operational statistics obtained from DOT sources were used 

in financial and statistical analyses of history, trends, status, and performance of 

airline revenues, expenses, profits, traffic and capacity, and the EAS Program. 

1. Airlines’ Quarterly Financial Review. A quarterly report analyzing the 

financial and operating performance and condition of the major airlines in 

the United States. Prepared using financial and traffic statistics reported to 

BTS by the airlines. Scope: 19 major air carriers (17 passenger and 2 allcargo carriers), from 2001 through the fourth quarter 2008. 

2. EAS Program. Information on EAS budgets and number of communities 

served was supplied to the OIG by EAS program administrators. Scope: 

budget and program activity for fiscal years (FY) 2001 through 2008 and 

OST’s projected program costs for FY 2009. 

3. Domestic Airline Fares Consumer Report. A quarterly report that supplies 

the average air fare paid by passengers traveling in distinct airport pair 

markets with an average of 10 or more daily passengers. Prepared using 

the DOT Domestic edition of the Origin and Destination Survey of 

Passenger Travel (O&D Survey). Scope: A 10-percent sample of tickets of 

passengers traveling on domestic flights within the 48 states, quarterly from 

the third quarter or 2007 through the third quarter 2008. 

C. Analyses Performed With FAA Data

Air Traffic Control (ATC) delay and operational statistics and airline flight 

schedule data obtained from FAA sources were used in statistical analyses of 

history, trends, status, and performance of air traffic control management and 

delays; airline scheduled capacity, operations, and market share; and aircraft type 

usage. 

1. Flight Schedule Data System (FSDS). A database of published airline flight 

schedules. Scope: domestic service, November 2007 versus November 

2008. 

2. Aviation System Performance Metrics (ASPM). A database of FAA air 

traffic control performance measures including delays, cancellations, 

operations, and causes for delays. Scope: 55 major airports across the 

country from 2000 through fourth quarter of 2008. 

3. Operations Net (OPSNET) Center. A database of air route traffic control 

center aircraft movement operations handled by the various air route traffic 

control centers. Scope: 22 air route traffic control centers, from September 

2001 through December 2008. 

Exhibit A. Scope and Methodology 
21

Exhibit A. Scope and Methodology 

D. Analyses Performed From Other Sources 

Historical and projected fuel prices and public and private reports and analysis 

regarding cash burn rates and liquidity and leverage of the airline industry. 

1. U.S. DOE Energy Information Administration. A collection of official 

energy statistics, including historical and projected jet fuel prices. Scope: 

jet fuel spot price and projections, from 1990 through 2010 and crude oil 

spot price from 2007 through February 2009) 

2. U.S. SEC Filings and Forms and airline industry analysis performed by 

various Wall Street Investment Banking firms. A collection of publicly 

available financial statement filings, including reports and estimates on 

liquidity, cash position, and leverage. Scope: first quarter 2007 through 

fourth quarter 2008. 

3. Airlines Press Releases and Aviation Publications: A collection of 

network, low cost and regional carriers’ fleet reductions announced in 

2008. Fleet reductions are broken down as follows: Low-Cost Carriers – 

AirTran Airways (6), Frontier Airlines (11), and Southwest Airlines (22) 

Network Carriers – American Airlines (85), Continental Airlines (67), 

Delta Air Lines (20), Northwest Airlines (47), United Airlines (94), and US 

Airways (12) Regional Carriers – Midwest Airlines (12) 
22

EXHIBIT B. LIST OF FIGURES AND TABLES 

Table A. Airfares by Flight Length ...........................................................................ii

Figure A. Regional Changes in Available Seats at Non-Hub Airports ..................iii

Figure B. Domestic Passenger Traffic .....................................................................iv

Figure C. Rate of Delayed Flights at 55 Major Airports ...........................................v

Figure D. Rate of Delayed Flights at Congested Airports .......................................v

Figure 1. Jet Fuel Prices ............................................................................................1

Figure 2. Airline Operating Revenue vs. Expenses.................................................2

Figure 3. Select Carrier 2008 Operating Profit/Loss ...............................................3

Figure 4. Industry Liquidity and Leverage ...............................................................3

Figure 5. Changes in Domestic Capacity .................................................................4

Figure 6. Change in Scheduled Flights for Legacy and Low-Cost Carriers..........5

Figure 7. Change in Scheduled Flights by Flight Distance ....................................5

Figure 8. Change in Scheduled Flights by Aircraft Size .........................................6

Figure 9. Capacity Changes at Major Airports.........................................................7

Figure 10. Regional Changes in Available Seats.......................................................8

Figure 11. Change in Scheduled Departures by Size of Community.......................8

Table 1. Change in Domestic Competition .............................................................9

Figure 12. Regional Changes in Available Seats at Non-Hub Airports ...................9

Figure 13. EAS Funding and Participating Communities .......................................10

Figure 14. Aviation-Related Employment for US Certificated Carriers .................11

Table 2. Summary of Airline Fees .........................................................................12

Figure 15. International Passenger Traffic...............................................................13

Figure 16. System-Wide Passenger Enplanements ................................................13

Exhibit B. List of Figures and Tables
23

Exhibit B. List of Figures and Tables

Figure 17. Load Factors for Select Airlines .............................................................14

Figure 18. Change in En Route Center Flight Operations ......................................14

Figure 19. Year-Over-Year Change in Tower Activity..............................................15

Figure 20. Domestic and International Air Cargo Traffic ........................................15

Figure 21. Delayed Flights at Major Airports ...........................................................16

Figure 22. Change in Rate of Delays at Three Best and Worst Airports ...............17

Figure 23. Length of Flight Delays at Major Airports ..............................................18

Figure 24. Flights Cancellations at Major Airports..................................................18
24

EXHIBIT C. GLOSSARY OF COMMONLY USED TERMS 

Available Seat Miles (ASMs) – One seat transported one mile; the most common 

measure of airline seating capacity. 

Actual Load Factor – The percentage of available seats that are filled with paying 

passengers. Load factor is computed as the ratio of Revenue Passenger Miles to 

Available Seat Miles.

Breakeven Load Factor – The load factor at which a flight earns revenues equating 

to its expenses. 

Cost per Available Seat Mile (CASM) – A measure of unit cost, calculated by 

dividing operating costs by available seat miles. 

Enplanements – The number of passengers boarding a flight. 

Enroute Center – Sometimes referred to as a “center,” or an Air Route Traffic 

Control Center, it houses the air traffic controllers and equipment needed to 

identify and direct aircraft during the en route—as opposed to the approach and 

departure—portion of their flights.

Essential Air Service – Government-subsidized airline service to eligible small 

communities, which began after the Airline Deregulation Act of 1978. 

General Aviation – A term used to describe all non-military and non-airline flying, 

encompassing everything from recreational aircraft to experimental aircraft to 

privately owned and operated business jets. 

Hub Airport – A ranking designation assigned to U.S. airports by FAA based on 

an airport’s percentage share of total passenger enplanements at all U.S. airports. 

FAA categorizes airports based on the following percentage of annual passenger 

enplanements in the United States by hub type. 

 Large-Hub 1.0 percent or more of total enplanements 

 Medium-Hub at least 0.25 percent, but less than 1 percent 

Small-Hub at least 0.05 percent, but less than 0.25 percent 

 Non-Hub at least 2,500, but less than 0.05 percent. 

Instrument Flight Rules – Rules governing flight relying on the aircraft's 

instruments and navigation aids. IFR permit aircraft to fly in certain limited 

visibility and cloud conditions. Virtually any commercial operation—including 

airlines and business jets—utilizes the IFR system. 

Jet Fuel – The term describes kerosene-type jet fuel used primarily for commercial 

turbojet and turboprop aircraft engines. 

Exhibit C. Glossary of Commonly Used Terms 
25

Large Jet – For the purposes of the Aviation Industry Performance report, large 

jets are all commercially operated jet transport aircraft other than those defined as 

regional jets. 

Low-Cost Carrier – For the purposes of the Aviation Industry Performance report, 

the category low-cost carrier includes AirTran, America West, American Trans 

Air (ATA), Frontier Airlines, JetBlue Airways, National Airlines, Pan American 

Airways, Southwest Airlines, Spirit Airlines, Sun Country, and Vanguard Airlines. 

However, Vanguard Airlines and National Airlines ceased operations in July 2002 

and November 2002, respectively. ATA ceased operations in April 2008 and Pan 

American ceased operations in 1998. America West airlines merged with 

US Airways in September 2007. 

Major Legacy Passenger Airline – Except where noted, for the Aviation Industry 

Performance report, the category major passenger airline includes AirTran 

Airways, Alaska Airlines, American Airlines, American Eagle Airlines, Atlantic 

Southeast Airlines, Comair, Continental Airlines, Delta Air Lines, ExpressJet, 

Frontier, JetBlue, Mesa, Northwest Airlines, SkyWest, Southwest Airlines, United 

Airlines, and US Airways. AirTran, Atlantic Southeast, and Skywest were added 

to the list in the first quarter of 2006. In the first quarter of 2007, America Trans 

Air (ATA) was removed from the list while Mesa was added. America West 

airlines combined with US Airways in the fourth quarter of 2007 on account of 

their September 2007 merger. 

National Airspace System (NAS) – The common network of U.S. airspace, air 

navigation facilities, equipment and services, airports or landing areas. 

Network or Legacy Airline – For the purposes of the Aviation Industry 

Performance report, the category network airline includes Alaska Airlines, 

American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines, 

United Airlines, and US Airways. For the purposes of consistency over time, the 

financial and operating statistics for the former Trans World Airlines have been 

merged with those of the acquirer American Airlines. 

Other Airlines – Except where noted, for the purposes of Aviation Industry 

Performance report, the category other airlines includes all scheduled U.S. airlines 

not included in the network and low-cost categories, that is, mostly smaller 

scheduled regional, commuter, and national airlines (many of which are affiliated 

with the major network carriers). 

Exhibit C. Glossary of Commonly Used Terms 
Exhibit C. Glossary of Commonly Used Terms 

26

Regional Carrier – An airline with a fleet principally comprised of aircraft 

configured with fewer than 100 seats, operating within a limited geographic scope 

(may have multiple regions, though not interlinked across the country under its 

own single brand), principally serving hub-and-spoke networks, and conducting 

most of its operations under the affiliation(s) of larger branded airlines (network 

carriers). For the purposes of this report, we also consider internal mainline 

operating units that are principally involved in regional operations as regional 

carriers. 

Regional Jet (RJ) – All turbofan jet-powered aircraft configured to seat 77 or 

fewer passengers, operated by either a regional or network carrier, and all turbofan 

jet-powered aircraft configured to seat between 78 and 100 passengers and 

operated by regional carriers. 

Regions – For purposes of this report, the Nation was delineated into four regions 

composed of states and the District of Columbia. Northeast Region: Maine, New 

Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New 

Jersey, and Pennsylvania. Midwest Region: Ohio, Indiana, Illinois, Michigan, 

Wisconsin, Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, 

and Kansas. South Region: Delaware, Maryland, Virginia, West Virginia, North 

Carolina, South Carolina, Georgia, Florida, Kentucky, Tennessee, Alabama, 

Mississippi, Arkansas, Louisiana, Oklahoma, Texas, and District of Columbia. 

West Region: Montana, Idaho, Wyoming, Colorado, New Mexico, Arizona, Utah, 

Nevada, Washington, Oregon, California, Alaska, and Hawaii. 

Revenue or Yield Management – The process an airline uses to optimize revenue 

across its system of flights. In this process, airlines seek to determine the optimal 

mix of prices and seats to maximize revenue per flight, or per network of flights, 

rather than per person. 

Revenue Passenger Mile (RPM) – One fare-paying passenger transported one 

mile; the most common measure of demand for air travel. 

Revenue Ton Miles – One ton of cargo transported one mile. 

Tower – Also referred to as control tower, is located at the airport and generally 

handles at and in close proximity of the airport. 

Turboprop – A type of engine that uses a jet engine to turn a propeller. 

Turboprops are often used on regional and business aircraft because of their 

relative efficiency at speeds slower than, and altitudes lower than, those of a 

typical jet aircraft. 

Very Light Jet (VLJ) – Typically an aircraft weighing less than 6,000 pounds 

equipped with twin turbojet engines with seating for four to six passengers. 
27

EXHIBIT D. MAJOR CONTRIBUTORS TO THIS REPORT 

Name Title 

David Tornquist Assistant Inspector General for Rail 

and Maritime Program Audits and 

Economic Analysis 

Mitch Behm Program Director 

Jaydeep Borwankar Project Manager 

Stephen G. Smith Transportation Analyst 

Andrew Sourlis Analyst 

Meredith McDaniel Analyst 

Michael Broadus Analyst 

Andrea Nossaman Writer-Editor

Exhibit D. Major Contributors to This Report 
The following pages contain textual versions of the graphs and charts found in this 

document. These pages were not in the original document but have been added 

here to accommodate assistive technology.
Aviation Industry Performance: A Review of the Aviation 

Industry in 2008 

Section 508 Compliant Presentation 

Table A: Airfares by Flight Length (3Q08 versus 3Q07)

Market Definition Average Airfares 

(Average Distance) 3Q08 3Q07 

Change 

Short-Haul (300 miles) $142 $122 16% 

Medium-Haul (1,000 miles) $183 $168 9% 

Long-Haul (1,500 miles) $232 $208 11% 

Source: Department of Transportation 

Note: Airfare data do not include fees for checked bags and other ancillary services. 

Figure A: Regional Changes in Available Seats at Non-Hub Airports, 

November 2008 versus November 2007 

Region 

Percent 

Change in 

Available 

Seats 

Northeast (includes Connecticut, Maine, Massachusetts, New 

Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, 

Vermont) 

-29% 

Midwest (includes Illinois, Indiana, Iowa, Kansas, Michigan, 

Minnesota, Missouri, Nebraska, North Dakota, Ohio, South 

Dakota, Wisconsin) 

-23% 

West (includes Alaska, Arizona, California, Colorado, Hawaii, 

Idaho, Montana, Nevada, New Mexico, Oregon, Utah, 

Washington, Wyoming) 

-14% 

South (includes Alabama, Arkansas, Delaware, Florida, Georgia, 

Kentucky, Louisiana, Maryland, Mississippi, North Carolina, 

Oklahoma, South Carolina, Tennessee, Texas, Virginia, West 

Virginia) 

-11% 

National Average -16% 

Source: Federal Aviation Administration 
Figure B: Domestic Passenger Traffic, 2008 versus 2007 and 

2002 (Monthly Revenue Passenger miles in Billions) 

Month 2002 2007 2008 

January 33.9 45.0 45.5 

February 33.6 41.9 44.6 

March 42.6 52.0 53.4 

April 39.5 49.9 49.5 

May 40.9 50.4 51.5 

June 44.1 53.4 53.8 

July 47.2 55.9 56.1 

August 46.9 53.4 54.2 

September 35.1 44.2 42.2 

October 40.1 48.3 46.1 

November 37.2 47.0 41.6 

December 42.4 48.0 45.1 

Source: Bureau of Transportation Statistics

Figure C: Rate of Delayed Flights at 55 Major Airports 

2008 versus 2007 and 2002 

Month 2002 2007 2008 

January 20% 

27% 28% 

February 17% 31% 31% 

March 22% 28% 30% 

April 17% 25% 24% 

May 18% 23% 22% 

June 20% 31% 29% 

July 19% 30% 24% 

August 17% 28% 22% 

September 13% 20% 17% 

October 16% 24% 16% 

November 17% 22% 18% 

December 23% 35% 33% 

Source: Federal Aviation Administration 
Figure D: Rate of Delayed Flights at Congested 

Airports (4th Quarter 2008) 

Airport Rate of Delay 

(4th Qtr 2008) 

New York – Newark 37% 

New York – Kennedy 30% 

Miami 28% 

San Francisco 27% 

Atlanta 27% 

New York - LaGuardia 26% 

Average delay rate at remaining 49 

airports tracked by the FAA 21% 

Source: Federal Aviation Administration

Figure 1: Jet Fuel Prices – U.S Gulf Coast 

Spot Price (January 1998 – February 2009) 

Month Monthly Oil Price 

($/Gallon) 

January 1998 $0.48 

January 1999 $0.33 

January 2000 $0.78 

January 2001 $0.87 

January 2002 $0.53 

January 2003 $0.89 

January 2004 $1.00 

January 2005 $1.33 

January 2006 $1.82 

January 2007 $1.65 

January 2008 $2.60 

January 2009 $1.47 

Source: Energy Information Administration 

Note: Average spot price for July 2007: $2.14/gallon 

Note: Average spot price for July 2008: $3.89/gallon 

Note: Average spot price for February 2009: $1.26/gallon 
Figure 2: Airline Operating Revenue versus Expenses ($ in Billions) 

Quarter 

Operating 

Revenues 

In Billions 

Operating 

Expenses 

In Billions 

First Quarter 2001 $23.3 $24.1 

Second Quarter 2001 $24.3 $25.0 

Third Quarter 2001 $21.2 $24.4 

Fourth Quarter 2001 $16.6 $20.9 

First Quarter 2002 $18.2 $20.9 

Second Quarter 2002 $20.4 $21.9 

Third Quarter 2002 $20.2 $22.6 

Fourth Quarter 2002 $18.8 $21.7 

First Quarter 2003 $19.2 $22.2 

Second Quarter 2003 $20.3 $21.0 

Third Quarter 2003 $21.9 $21.3 

Fourth Quarter 2003 $21.0 $21.7 

First Quarter 2004 $22.0 $23.0 

Second Quarter 2004 $24.7 $23.3 

Third Quarter 2004 $24.9 $24.3 

Fourth Quarter 2004 $23.4 $25.5 

First Quarter 2005 $23.9 $25.4 

Second Quarter 2005 $27.2 $26.7 

Third Quarter 2005 $28.1 $28.0 

Fourth Quarter 2005 $26.3 $27.7 

First Quarter 2006 $27.6 $28.0 

Second Quarter 2006 $33.2 $29.6 

Third Quarter 2006 $32.1 $30.4 

Fourth Quarter 2006 $29.3 $28.6 

First Quarter 2007 $28.9 $28.1 

Second Quarter 2007 $33.2 $30.2 

Third Quarter 2007 $34.7 $31.9 

Fourth Quarter 2007 $32.2 $32.2 

First Quarter 2008 $32.4 $33.6 

Second Quarter 2008 $36.5 $38.1 

Third Quarter 2008 $37.3 $38.8 

Fourth Quarter 2008 $31.3 $32.7 

Source: Office of Secretary of Transportation – Airline Quarterly Financial Review 
Figure 3: Select Carrier 2008 Operating 

Profit/(Loss) ($ in Millions) 

Airline Profit or Loss 

(In Millions) 

AirTran -$72 

Alaska -$23 

American -$2,054 

Continental -$378 

Deltaa $56 

Frontier -$87 

JetBlue $85 

Northwestb -$541 

Southwest $449 

United -$1,747 

US Airways -$1,773 

Source: Department of Transportation.

a

 Includes operating results for Northwest from October 30 

through the end of 2008 due to merger. 

b Financial results through October 29, 2008. 

Figure 4: Industry Liquidity and Leverage 

Quarter Total Liquidity/LTM 

Revenue 

Total Debt/Total 

Equity 

Second Quarter 2007 25.4% 1.5x 

Third Quarter 2007 22.7% 1.4x 

Fourth Quarter 2007 21.5% 1.3x 

First Quarter 2008 20.3% 1.8x 

Second Quarter 2008 23.9% 2.1x 

Third Quarter 2008 18.8% 3.0x 

Fourth Quarter 2008 15.6% 12.4x 

Source: Security and Exchange Commission 

Note: Total liquidity defined as total available cash (cash + short term investment 

 + balance available to be borrowed under a revolving line of credit) 
Figure 5: Changes in Domestic Capacity, 2008 versus 

2007 and 2002 (Available Seat Miles in Billions) 

Month 2002 2007 2008 

January 54.0 62.4 62.6 

February 50.3 56.2 58.8 

March 57.3 65.2 65.1 

April 56.1 63.0 62.0 

May 57.8 64.5 63.6 

June 58.7 64.4 64.2 

July 61.7 67.5 67.0 

August 61.9 67.5 65.2 

September 55.9 62.2 55.7 

October 59.2 64.2 58.1 

November 56.1 62.4 55.0 

December 58.4 64.1 57.2 

Source: Bureau of Transportation Statistics

Figure 6: Changes in Scheduled 

Flights for Legacy and Low Cost 

Carriers, November 2008 versus 

November 2007 

Airline Percentage 

Change 

Northwest -1% 

Southwest -2% 

JetBlue -3% 

Frontier -6% 

AirTran -7% 

Spirit -11% 

US Airways -13% 

Continental -13% 

United -14% 

Alaska -15% 

Delta -17% 

American -17% 

Source: Federal Aviation Administration 
Figure 7: Change in Scheduled Flights by Flight 

Distance November 2008 versus November 2007 

(Distance in Miles) 

Range in Miles Percent Change 

in Flights 

Short-Haul: 0 to 249 miles -13% 

Short-Haul: 250 to 499 miles -12% 

Medium-Haul: 500 to 999 miles -12% 

Medium-Haul: 1,000 to 1,499 miles -13% 

Long-Haul: 1,500 to 2,499 miles -17% 

Long-Haul: 2,500 to 7,000 miles -17% 

Source: Federal Aviation Administration

Figure 8: Percent Change in Scheduled Flights by 

Aircraft Size, November 2008 vs. November 2007 

Aircraft Type Percent Change 

Piston -15% 

Turboprop -17% 

Regional Jet 35-70 Seats -15% 

Regional Jet 71-100 Seats 29% 

Jet 101-170 Seats -11% 

Jet 171-250 Seats -16% 

Jet 251-300 Seats -23% 

Source: Federal Aviation Administration 

Note: Number ranges in figure 8 represent number of seat 

 ranges for that aircraft.
Figure 9: Capacity Changes at Major Airports, November 2008 

versus November 2007 

Airports Percent Change in 

Scheduled Flights 

Percent Change in 

Scheduled Seats 

Atlanta -3% -3% 

Baltimore -8% -9% 

Boston -12% -10% 

Charlotte -2% -3% 

Cincinnati -27% -25% 

Cleveland -17% -14% 

Dallas -10% -10% 

Denver -4% -2% 

Detroit -4% -7% 

Ft. Lauderdale -12% -9% 

Honolulu -14% -16% 

Houston -13% -10% 

Kennedy -7% -8% 

LaGuardia -12% -11% 

Las Vegas -18% -16% 

Los Angeles -22% -15% 

Miami -8% -1% 

Chicago Midway -17% -18% 

Minneapolis -5% -12% 

Reagan National -5% -5% 

Newark -5% -10% 

Oakland -28% -27% 

Chicago O’Hare -14% -14% 

Orlando -17% -12% 

Philadelphia -5% -7% 

Phoenix -13% -13% 

San Diego -15% -9% 

San Francisco -4% -5% 

Salt Lake City -15% -13% 

Seattle -8% -5% 

Tampa -15% -11% 

Washington Dulles -11% -12% 

Source: Federal Aviation Administration
Figure 10: Regional Changes in Available Seats, November 2008 versus 

November 2007 

Region 

Percent Change 

in Available 

Seats 

Northeast (includes Connecticut, Maine, Massachusetts, New 

Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, 

Vermont) 

 -9% 

Midwest (includes Illinois, Indiana, Iowa, Kansas, Michigan, 

Minnesota, Missouri, Nebraska, North Dakota, Ohio, South 

Dakota, Wisconsin) 

-14% 

West (includes Alaska, Arizona, California, Colorado, Hawaii, 

Idaho, Montana, Nevada, New Mexico, Oregon, Utah, 

Washington, Wyoming) 

-13% 

South (includes Alabama, Arkansas, Delaware, Florida, Georgia, 

Kentucky, Louisiana, Maryland, Mississippi, North Carolina, 

Oklahoma, South Carolina, Tennessee, Texas, Virginia, West 

Virginia) 

 -8% 

National Average -11% 

Source: Federal Aviation Administration 

Figure 11: Change in Scheduled Departures by Size of Community, 2008 

vs. 2007 

Month Large-Hub

Airports 

Medium-Hub 

Airports 

Small-Hub 

Airports 

Non-Hub 

Airports 

January -1.08% 0.19% -0.44% 0.03% 

February 2.13% 3.57% 3.43% 2.10% 

March -1.79% -0.44% -0.48% -3.15% 

April -0.97% -1.45% -0.40% -2.25% 

May -1.64% -3.74% -3.07% -4.04% 

June -1.16% -3.85% -2.56% -3.88% 

July -1.07% -4.45% -2.72% -4.12% 

August -3.79% -7.61% -6.21% -8.00% 

September -6.82% -11.97% -10.21% -9.73% 

October -8.30% -13.54% -12.18% -12.02% 

November -10.38% -16.02% -14.18% -14.38% 

Source: Federal Aviation Administration 
Table 1. Change in Domestic Competition, 

November 2008 versus November 2007

Percent Change in 

Carriers Serving 

Airport 

Airports in 

Group 

Average 

Carriers 

Lost 

100% (Lost all carriers) 30* -1.1 

75% - 99% 1* -3.0 

50% - 74% 45* -1.3 

25% - 49% 90* -1.3 

1% - 24% 69* -1.4 

0% (Lost no carriers) 405* 0.0 

Increase in carriers 27* 1.1 

Total 667 

Source: Federal Aviation Administration 

*12 of 30 airports only lost service temporarily during a 

transition to a replacement carrier.

Figure 12: Regional Changes in Available Seats at Non-Hub Airports, 

November 2008 versus November 2007 

Region Percent Change in 

Available Seats 

Northeast (includes Connecticut, Maine, Massachusetts, New 

Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, 

Vermont) 

-29% 

Midwest (includes Illinois, Indiana, Iowa, Kansas, Michigan, 

Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, 

Wisconsin) 

-23% 

South (includes Alabama, Arkansas, Delaware, Florida, Georgia, 

Kentucky, Louisiana, Maryland, Mississippi, North Carolina, 

Oklahoma, South Carolina, Tennessee, Texas, Virginia, West 

Virginia) 

-11% 

West (includes Alaska, Arizona, California, Colorado, Hawaii, 

Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, 

Wyoming) 

-14% 

National Average -16% 

Source: Federal Aviation Administration
Figure 13: EAS Funding and Participating Communities 

Fiscal Year Appropriations

In Millions 

Number of 

Communities 

Subsidized 

2001 $50 115 

2002 $113 123 

2003 $102 126 

2004 $102 140 

2005 $102 146 

2006 $109 152 

2007 $109 147 

2008 $109 146 

 2009* $160 148 

Source: Department of Transportation 

* FY 2009 numbers are projections

Figure 14: Aviation Related Employment 

for US Certificated Carriers (in Thousands) 

Year Employment 

2000 667,778 

2001 599,531 

2002 590,779 

2003 558,246 

2004 563,588 

2005 547,795 

2006 539,833 

2007 566,069 

2008 528,813 

Source: Bureau of Transportation Statistics (BTS) 
Table 2: Summary of Airline Fees 

Airline 

First 

Checked 

Bag 

Second 

Checked 

Bag 

Additional 

Bags 

Ticket 

Change 

Fee 

Seat 

Selection 

Fee 

AirTran Yes Yes Yes Yes Yes 

Alaska No Yes Yes Yes No 

American Yes Yes Yes Yes No 

Continental Yes Yes Yes Yes No 

Delta Yes Yes Yes Yes No 

JetBlue No Yes Yes Yes Yes 

Midwest Yes Yes Yes Yes No 

Northwest Yes Yes Yes Yes No 

Southwest No No Yes No No 

Spirit Yes Yes Yes Yes Yes 

United Yes Yes Yes Yes Yes 

US Air Yes Yes Yes Yes Yes 

Source: Airline web sites 

Figure 15: International Passenger Traffic (Year-Over-Year Change in 

Revenue Passenger Miles) 

Latin Atlantic Pacific 

First Quarter 2006 1.1% -1.6% 4.8% 

Second Quarter 2006 6.9% 4.4% 4.1% 

Third Quarter 2006 1.8% 3.0% 2.4% 

Fourth Quarter 2006 6.6% 4.3% 2.1% 

First Quarter 2007 2.9% 5.8% 2.5% 

Second Quarter 2007 2.9% 5.0% 0.8% 

Third Quarter 2007 8.0% 7.1% -2.0% 

Fourth Quarter 2007 9.0% 9.7% 2.9% 

First Quarter 2008 10.2% 7.2% 3.1% 

Second Quarter 2008 2.8% 3.5% 2.0% 

Third Quarter 2008 -4.6% 1.1% 1.6% 

Fourth Quarter 2008 -9.8% -4.3% -9.7% 

Source: Bureau of Transportation Statistics
Figure 16: System-Wide Passenger 

Enplanements (in Millions) 

Year 

Number of 

Enplanements 

(millions) 

2000 699 

2001 653 

2002 641 

2003 647 

2004 704 

2005 739 

2006 745 

2007 770 

2008 741 

Source: Bureau of Transportation Statistics 

Figure 17: Load Factors for Select 

Airlines, Third Quarter 2008 

Airline Actual 

Load Factor

Alaska 79.5% 

American 82.2% 

Continental 83.3% 

Delta 84.9% 

JetBlue 84.0% 

Northwest 86.8% 

Southwest 71.6% 

United 83.2% 

US Airways 83.9% 

Average Load Factor 82.2% 

Breakeven Load Factor 89.9% 

Source: Department of Transportation – Airline 

Quarterly Financial Review 
Figure 18: Change in En Route Center Flight Operations versus 2000 

Month 2001 % 

Change 

2002 % 

Change

2003 % 

Change

2004 % 

Change

2005 % 

Change

2006 % 

Change 

2007 % 

Change

2008 % 

Change

January 5% -3% 0% 2% 5% 3% 5% 5% 

March -4% -8% -10% 0% 0% -4% -3% -1% 

March -2% -7% -7% 1% 4% 0% 1% -2% 

April 0% -3% -5% 3% 4% 1% 2% 0% 

May -1% -4% -7% -1% 3% 0% 1% -3% 

June -3% -4% -6% 1% 4% 0% 2% -4% 

July 1% -1% -2% 3% 4% 1% 3% -1% 

August 0% -4% -6% 1% 2% 0% 1% -7% 

September -16% -5% -5% 0% 2% -1% -1% -11% 

October -8% -4% -3% 1% -2% -1% 0% -12% 

November -8% -7% -4% 2% 0% 1% 2% -14% 

December -5% -1% 3% 7% 5% 6% 3% -9% 

Source: Federal Aviation Administration

Figure 19: Year-Over-Year Change in Tower Activity, 2008 

versus 2007

Month Airline General 

Aviation Military 

January -1% -2% -6% 

February 3% 0% 2% 

March -2% -10% -5% 

April -1% -2% 8% 

May -4% -10% -8% 

June -3% -11% 1% 

July -2% -3% 18% 

August -6% -11% 1% 

September -9% -7% 16% 

October -10% -13% -5% 

November -13% -20% -5% 

December -10% -15% 11% 

Source: Federal Aviation Administration 

Note: Chart presents IFR flight operations 
Figure 20: Domestic and International Air Cargo Traffic (Revenue Ton-Miles 

in Billions) 

Quarter Year 

Domestic Traffic 

(Revenue Ton-Miles) 

in billions 

International Traffic 

(Revenue Ton-Miles) 

in billions 

First Quarter 2007 5.1 9.5 

Second Quarter 2007 5.3 10.1 

Third Quarter 2007 5.3 9.9 

Fourth Quarter 2007 5.4 10.6 

First Quarter 2008 4.8 9.6 

Second Quarter 2008 4.9 10.2 

Third Quarter 2008 4.7 9.5 

Fourth Quarter 2008 4.4 8.6 

Source: Bureau of Transportation Statistics

Figure 21: Delayed Flights at Major Airports, 2008 

versus 2007 and 2002 (in Thousands) 

Month 

2002 

Arrival 

Delays 

2007 

Arrival 

Delays 

2008 

Arrival 

Delays 

January 122,447 183,178 185,557 

February 97,553 192,061 196,320 

March 139,565 197,891 208,194 

April 110,234 169,522 159,058 

May 114,836 162,256 151,261 

June 127,174 210,491 194,626 

July 124,435 208,996 169,343 

August 113,938 200,996 149,536 

September 82,308 129,931 100,413 

October 108,417 166,019 103,660 

November 102,923 150,635 104,898 

December 144,773 239,932 201,229 

Source: Federal Aviation Administration
Figure 22: Change in Rate of Delays at 

Three Best and Worst Airports, 

Summer 2008 versus Summer 2007 

Airport Percent 

Change 

San Francisco 6% 

Honolulu 2% 

Newark 0% 

Minneapolis/St. Paul -32% 

Pittsburgh -32% 

Salt Lake City -38% 

Source: Federal Aviation Administration

Figure 23: Length of Flight Delays at Major Airports, 

2008 versus 2007 and 2002 (in Minutes) 

Month 2002 2007 2008 

January 44 52 55 

February 42 56 57 

March 45 57 57 

April 45 54 53 

May 46 52 52 

June 51 62 60 

July 49 59 61 

August 47 58 58 

September 45 51 51 

October 42 52 48 

November 44 51 52 

December 50 57 61 

Source: Federal Aviation Administration
Figure 24: Flight Cancellations at Major Airports, 2008 vs. 2007 and 

2002 (in Thousands) 

Month 2002 

Cancellations

2007 

Cancellations 

2008 

Cancellations 

January 11,876 16,135 17,245 

February 6,851 26,786 22,209 

March 9,034 18,814 17,700 

April 7,078 12,845 12,599 

May 7,849 8,472 8,865 

June 10,721 18,996 13,707 

July 8,893 15,022 12,891 

August 7,263 13,844 11,705 

September 5,680 8,163 12,459 

October 6,514 9,648 6,672 

November 5,216 8,664 7,918 

December 11,638 22,810 21,532 

Source: Federal Aviation Administration