Airlines cancelled over 20,254 flights from Saturday, Oct. 27 through Thursday, Nov. 1 in North America due to Hurricane Sandy, leaving thousands of passengers stranded across the nation and around the world.
While it's still too early to determine the exact costs of the storm on the industry, at least one analyst who spoke with The Huffington Post said carriers could sustain hundreds of millions in losses due to the storm.
Bob Mann, an airline industry analyst with R.W. Mann, Inc., told The Huffington Post via phone on Thursday that the "overall revenue impact could be between $400 and $500 million total. The net loss for U.S. carriers is around $300 million."
Michael Steiner, executive vice president of Ovation Corporate Travel, offered a lower estimate. "I would imagine the hit for the airlines will be in the tens of millions," Steiner told HuffPost via email. "The airlines are still in triage mode trying to get travelers to their destinations and have probably not been taking in much additional revenue, as most is probably coming from canceled flights and exchanges. Flights are going to be full for the next week getting the stranded passengers back."
In an interview with TheStreet last week, Wolfe Trahan analyst Hunter Keay estimated Sandy's total impact on the seven most affected airlines -- which include American, Delta, JetBlue, US Airways, Southwest, Spirit and United -- to be $190 million on earnings before interest and taxes.
How is loss determined in this case? In an interview with HuffPost, Mann offered an explanation. "Here's the usual assumption: Passengers with unrefundable tickets make up roughly 70 percent of those flying, which airlines will end up earning back. 30 percent of passengers are either emergency or business travelers. Those trips don't necessarily recur, so that money is then lost for the airlines," he said. "All told, roughly 25 percent of revenue is lost ... but that depends on how long service is suspended for. The airlines ask themselves at times like this: 'Is the cost of reconstructing the schedule balanced with the period during which no one is flying?' The airlines, at some airports, weren't flying for two and a half days. That's a period in which no one was flying and no one was burning fuel, which outweighs the cost of reconstructing the schedule.
"One of the saving graces of all of this," Mann said, "is that this is one of the few times of year when planes aren't absolutely full. It's the lull before the holidays."
So can you compare Sandy and Irene? "It's very different," said Mann. "Sandy was different than other storms because the geographic scope was wider and the scope of devastation was much bigger in terms of compromise of infrastructure, not just airports but also loss of power. Customers can't get to the airport, and even if they do arrive [at JFK, Newark or LaGuardia, for instance], they have no way to get them out of there to where they need to be. Locals, too, who work at the airports--maintenance, ramp workers, flight attendants, TSA -- if they don't have power, they can't get to work."
As for the individual airlines, JetBlue spokeswoman Allison Steinberg told HuffPost that it's far too early to tell the cost of the storm. Matt Miller, media relations representative for American Airlines, echoed the sentiment.
On Friday, Delta released the following statement via email regarding its losses from Sandy:
In response to Hurricane Sandy, Delta cancelled more than 3,500 flights in October, which caused a 2 percent system capacity reduction versus prior year. The company is estimating that the hurricane negatively impacted October revenues by $45 million and reduced October profit by approximately $20 million. Delta is still assessing the impact to November, but expects it to be less than October. Delta's October unit revenue improvement was approximately one point higher than it would have been without the hurricane impact.
So who's right? Many domestic airlines could hint at Sandy's impact in their quarterly reports; otherwise only time will tell.
The Huffington Post is eager for insights from our community, especially people with experience in power, infrastructure and engineering, on the adequacy of emergency preparation in advance of Hurricane Sandy, and the degree to which past disasters have informed adequate planning and construction. Please send a note to firstname.lastname@example.org with insights and suggestions for the important questions that need to be asked of relevant private sector and government officials, and point us toward stories that need to be pursued.