Thanksgiving crowds will test downsized airlines

CHICAGO Tue Nov 25, 2008 3:08pm EST

CHICAGO Nov 25 (Reuters) - The number of travelers over the U.S. Thanksgiving holiday will be down sharply this year, but downsized airlines and unpopular bag check fees may mean no fewer headaches than a year ago.

"It's going to be a little bit more unpleasant than usual," said Rick Seaney, chief executive at air fare research site FareCompare.com.

"I think what you're seeing is the demand has withered at the same pace as the cutbacks," he said.

The Air Transport Association of America (ATA), an industry trade group, predicted a 10 percent year-over-year decrease in the number of passengers traveling on U.S. airlines during this year's Thanksgiving holiday season.

The three busiest travel days surrounding Thanksgiving Day are usually the Wednesday before the holiday, and the Sunday and Monday following the holiday. On these days, ATA estimated that planes would be nearly 90 percent full.

The airline industry, battered severely in the first half of 2008 by soaring fuel costs, has slashed capacity -- the number of seats for sale.

AMR Corp's AMR.N American Airlines has said it trim domestic capacity up to 12 percent in the fourth quarter. UAL Corp's UAUA.O United Airlines said it would cut its fourth-quarter mainline capacity up to 16.5 percent.

The goal was to offset airlines' fuel burdens with fare pricing power and by streamlining operations.

In the second half of 2008, the price of crude oil CLc1 fell some 65 percent from a record high near $150 a barrel to near $50. The decline was welcome relief for airlines.

But the weak economy that triggered the oil slump also eroded travel budgets. By some estimates, the unusual confluence of events more-or-less was neutral to the embattled industry.

FareCompare's Seaney said fares, which rose rapidly early this year, stabilized in the second half and are roughly the same as a year ago. He said many airlines also are offering holiday sales to boost demand.

For travelers, Thanksgiving will be the first major test of airline efficiency for the downsized industry.

At least one industry watcher expects travelers to see some key advantages, including fewer flight delays and shorter lines at security checkpoints, stores and concession stands.

"The overall hassle factor is going to drop substantially," said Terry Trippler, travel expert at TripplerTravel.com.

Trippler acknowledged, however, one factor that could disrupt the smoothness he predicts at airports during the holiday travel period.

New revenue-generating fees -- especially a controversial bag check fee -- could slow lines as thrifty travelers are forced to either gate check luggage or cram more items into overhead compartments in aircraft cabins.

But, in general, Trippler expects holiday air travel, despite new fees and other pitfalls, to be more fluid than in years past.

"I think people are going to say 'I paid $150 more, but boy was it worth it,'" he said.

(Reporting by Kyle Peterson; Editing by Bernard Orr)

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