Source: CNBC
Why You May Be Flying On Bigger Planes This Summer
May 28, 2023 · 14m 53s
https://www.youtube.com/watch?v=Qz3IQwbcJgM
Airports are busy, so busy that some airlines have started turning to bigger planes to add more passengers to deal with congestion, rising costs and a pilot shortage. This week on Now Boarding, we discuss the growing trend of up gauging as airlines head into the busy summer travel season. Welcome to Now Boarding. I'm Erin Black and this is Leslie Josephs. We cover aviation here at CNBC. And
this week we are going to discuss up gauging which. Leslie I have no idea what that means. So upgauging, not really a term that people associate with aviation. It's basically just using bigger planes. So airlines have a host of ways that they can grow. A pretty obvious one. Let's say they want to increase service from New York to Los Angeles. They can add flights. That's not
always an option. What airlines can do instead is use a bigger plane. So imagine you have to get more people from A to B on the road. And there's so much traffic. And one way to get around that is, you know, use mass transit and get more people on the same vehicle, whether it's, you know, a train or a bus or something like that. So that's
that's basically what that means. So you recently wrote an article about this and you were out at Newark Airport where this seems to be a growing problem for them. It is. Newark is one of the most congested airports in the country. I mean, the New York City area in general is like some of the most crowded airspace there is. It's high demand. It's it's just a
very busy airspace, a lot of planes in a very small area. So what airlines are doing, United, their hub, is at Newark. They're one of the airlines doing this, is turning to bigger aircraft so that they can grow by fitting more people on one plane. And that means that you just have to you just have to fly one flight instead of flying two with a with
smaller jets. Yeah every time I come into Newark, you always have to wait for a gate because it's just so crowded at that airport. Yeah Newark really doesn't have any margin for error and they're very conscious of that. So up gauging is, you know, hopefully if everything works out is a way to transport more people, that means that you do need one gate and maybe not
two later. Newark is also one of those airports, as are like all the New York City area airports. If one thing one plane is leaving late is late off the gate, it tends to cascade and it just becomes a problem sometimes for the rest of the day. And so is this an issue of, you know, you know, not enough pilots, not enough air traffic controllers, like
what is causing this problem? Pretty much all of those things. There's not enough aircraft in some cases, there's not enough pilots in some cases for the smaller regional jets that fly shorter routes, aircraft are delayed. So the airlines are not getting the planes that they want from Boeing and Airbus on time. And a quicker way to to grow is by turning to the larger planes. But
it's also there's a cost element to it. So you fit more people on a plane and it drives down the unit cost for the airline. You know, you're dividing it by maybe 180 plus seats versus 150 seats. So it does help the airlines costs. It's, you know, good for profitability. So there is like a business case to be doing this. And airlines have been doing this
for years. You know, they've been turning to to larger aircraft and they're trying to do it for long haul flights on the A321, for example, which is a plane that could fly between here and and London practically. And like imagine that on a narrow body. So that's something that they're thinking about for the future. Yeah. I mean, I recently flew to Seattle on a narrow body,
and it seems like especially with all the carbon, you know, reducing reduction, they're trying to do that like narrow bodies going longer distances would be better for them, but it seems like they can't quite get there yet. Yeah. And I mean, it does help, but it just it's for some people it's very uncomfortable. Think about the 777 and like how high the ceiling is and kind
of how it it just feels bigger like you in some cases you feel like a little bit less closed in. So you do have that height above you. So it is in some cases more comfortable. But airlines don't have a lot of planes to spare. So it's not like something they could do whenever they want. You know, air travel is back from the pandemic, so there's
just no real margin to say like, oh, I'm going to take my 777, that I want to fly to Europe and then fly it instead to, I don't know, New York to Miami on that. Right. That's a pretty short trip that you wouldn't typically fly that large of a plane on. No, it's not. So you were in Newark. Is this happening like all over the country?
There are other airports where it is extremely congested. There is a shortage of air traffic controllers. And the FAA is aware of that. One thing that they've done is that in summer 2023, they're asking the airlines in the New York City area. Laguardia is one of those airports. Newark is one of those airports. Give up some of their kind of the landing timings and takeoff timings
that the federal government controls and and scale that back so that they can handle the shortage. But Florida is another example. It's been so popular in the pandemic, you know, as as just a destination. And Disney World is there. And Miami is a popular place and it's grown so much since 2020, it's also susceptible to storms. There's private jet traffic, there's SpaceX launches, there's military activity.
And that's another one of those places where. Up gauging would be key. But some some airlines don't really have the options. You know, a lot of the lower cost airlines think of like spirit. Jetblue, they don't have a regional airline that they can go from like a 70 seater or a 76 seater and go to like 150. Does the size of the airport come to play?
I know Newark, you know, can't really add more runways. Is that kind of also part of the problem? Well, yeah, they can't add more runways and then you can't build a gate overnight. There's no space for them to park. So expanding an airport could take years. And sometimes it takes like these projects can last over a decade just from planning environmental impact and things like that.
So they have to make do with the space that they have. You know, Newark has this new terminal, but the gates, like you can't put two triple sevens next to each other because the gates can't handle it. But they can put instead of these regional jets, they can start putting in like A320s. So you're thinking like 170 seats or more. And that could sort of alleviate
the pressure on the. Airport cause an issue like I know pilots are only certified, you know, a 737 pilot is usually only flying that type of aircraft. Like are they having to shift all of that stuff around to to to deal with this? Well, I mean, the pilots can switch from one to the other and there's a shortage of pilots. But what's starting to be alleviated
is that the mainline pilots are there. The regional pilots are the ones where there's like it's more acute. So the airlines are trying to move away from regionals as much as possible. Okay. So now they're flying these larger planes, you know, shorter distances. What does that mean for, you know, smaller communities and like, you know, where the more regional jet would be serving those those customers?
Those are the customers that are losing out the most. We've seen dozens of cities around the US lose service outright from airlines because they don't have the regional pilots. Erie, Pennsylvania is a recent example from American Airlines, and it's just like one airport after another. So those smaller communities are becoming much more isolated. And and we even heard from American Airlines earlier in the first quarter
earnings call saying you can't put a mainline jet, you can't put a 737 or an A320 on some of these communities because they can't fill it. So they're going to only do things that will help them make money. And airlines aren't even successful at that all the time. But you can't just put a larger plane on it. The costs would essentially kill the airline. How about
the cost to the consumer? You know, these the larger planes are obviously, you know, cost more to operate. Does that mean, you know, ticket prices will be going up for for some of these flights? They already are. So like if you're up gauging and think of like LaGuardia Airport, let's say, and something's going from two regional flights to one, that gives you, you know, one option.
So the consumer has to deal with maybe it's not the time that they want. It also means in some cases that there is seat reduction in the market. That's not airline's main goal, especially this summer that's coming up where demand is so high. But if there's a seat reduction, then then yeah, the airlines have more control over the markets. You're going to get on that flight.
You want to do you want to go where you want to go, then you're going to have to pay up. And as a consumer, you have fewer options. So which carriers are doing this the most? I know you were with United out at Newark, but are there other airlines that this is happening to? Delta has been doing this for a long time. They want to scale
back and have done since 2018 or even before then getting rid of more of the regional flights up into a mainline plane. That also helps them control the experience a little bit more. So about half, maybe a little bit more of departures in the US are actually run by regional. And if you're Delta and you have like a very strong brand awareness, when you're on a
regional, maybe the Wi-Fi doesn't work, maybe the seatback screen isn't there and there are things that you can't really control and they want to have that be, you know, they want to get that premium revenue and they can do that better with their own aircraft. So how else does this affect the consumer in the long run? So with a lot of these up gauge planes, it
means that you're sharing your space with more people. So, you know, like the battle for putting your bag in the overhead. And the most annoying part, I think, of air travel is boarding and just watching everybody slowly find their seat and learn what an overhead bin is and like how to adjust their bag. So that takes a lot of time. And we're talking about like an
airport like Newark that's already very congested. You know, the turnaround time for that plane is so important because it can ruin the next. Not ruin the next flight, but it can delay the next flight if it doesn't take off on time or if it doesn't push back from the gate on time because there's another plane right behind it. So that is kind of a challenge. And
now in past the pandemic, you know, business travel is not back. It's not kind of like the pro traveler is not there. It's leisure travelers, pretty much not the only game in town. But, you know, they're more important than they were when business travel was as strong as it was before, before the pandemic started. So I think from what we've heard from some people at airlines.
It's taking people maybe a little bit longer to board. So when you have more people on a plane, it's just the whole process will take a little bit longer. How many people are we talking? Like a narrow body can fit like 150 ish, sometimes more. Like, what does 777 fit? 300 plus, I mean, depending on on the configuration of it. But like Spirit Airlines or Frontier,
these ultra low cost carriers that have kind of a single class of they do have a single class of service, you know, they could fit 180, sometimes an A320 one like 190. One thing that's important, too, is that airlines have been putting more seats on planes for years. And that's why, you know, it's more uncomfortable. It's why, you know, our legroom has decreased over time. And
I think that it's not just the up gauging. It's just that more people are flying with you. You know, the line for the bathroom is longer. The like the service takes longer and things like that. So obviously, like the legacy airlines can do this. But what about airlines that only operate narrowbody jets? They don't have a lot of options. But like even a Spirit Airlines has
an A320 and a 321. The larger model so you can fit more people. But it's just nobody has any spares right now. Nobody can say like, oh, yeah, it's like in the hangar, let me like get out the 321 that I've been like, not using at all. You know, aircraft are in high demand right now, so and they're flying, you know, as much as they they
can. So they don't have as much option as someone like a United that has like a whole different kind of fleet plus a regional a bunch of regional carriers that fly for it. All right. So I guess people can expect to fly on bigger planes this summer, I guess. Yeah. And and share your space with more people. I once flew on a 777 from San Francisco
to Las Vegas, actually, and I think boarding took longer than the flight. Oh, my God. Because, I mean, it's such a short flight from San Francisco to Las Vegas. And we sat all the way in the back and it just, you know, probably, you know, just added so much more time. They do that from time to time. Was it a conference? No, it was just during
the summer. Sometimes in like high demand periods, you'll see them fly triple sevens or some other kind of large aircraft like something they know they can fill. And during the pandemic, when there wasn't a lot of international travel going on because of all the restrictions, you know, there was New York Miami on A777. And now that international is back, that's going to go abroad again. But
it's a short flight and it's it does take a really long time to board. So that is something to consider. I'm curious about the revenue, too. So are airlines back to like the capacity that they were operating at before the pandemic or is this like, you know. Is this something that is also like kind of impeding that growth? It depends on the airline. So the aircraft
shortage, the pilot shortage. So airline capacity is not back. In many cases, for many airlines, especially the large ones, to, you know, the pre-pandemic levels they're trying to get there. Some are getting close. Some have surpassed it. It depends on the airline. You know, it's not as bad as it was in 2021 when they were really struggling. And also the demand wasn't there. But it is
coming back. It helps them grow as much as they can. But sometimes the cases are not as as vast as, say, going from like a regional jet or a 737, a narrow body with like 150 ish people on it to A777 sometimes. And, you know, an up gauging could could be something as as simple from going from like 76 to 150 or something along those lines
or even a 320 to a 321. You know, that that does give them more capacity and that's, you know, 20 more seats or more that they can fill. So for a lot of airlines, capacity is not back to 2019 levels. This does help them grow and they'll kind of grow any way that they can at this point. But because they have a shortage of aircraft, you
know, this is a way that they can grow their capacity even though they're operating fewer flights. So fewer takeoffs and landings, let's say, but more seats are for sale. So when you're Googling your destinations, you know, you still you'll they're growing that way. So they're flying. But just many of them are flying on on the same plane. So the summer, if you find there are more
people on your flight and it feels more crowded, this is why. Uh, I look forward to that. Yes. Always fun. All right. Well, thanks for joining us on now boarding. We'll see you next time. Now boarding is produced by Erin Black and Leslie Josephs. Graphics by Jason Reginato Camera by Liam Mayes, with support from senior production Manager Kathy Mavrakis, supervising producer Jeniece Pettitt, and executive producer
Kamelia Angelova.
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