YEAR IN REVIEW
Industry by industry, executives give their outlook for 2004
By The Associated Press, 12/18/2003
EDITOR'S NOTE: For an industry-by-industry look at the year ahead, beat reporters for The Associated Press asked a prominent executive in each sector to provide their view of important trends for 2004.
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AIRLINES: Gerard Arpey, CEO of AMR Corp.
After more than two years in crisis, the nation's major airlines will start to see the benefits of cost-cutting and restructuring, Arpey believes. The economic upswing will boost travel demand, if only slightly.
"We're excited about the prospect of growing again and competing again," he says.
AMR owns American Airlines which, like many of its competitors, plans to add capacity for the first time in several years in 2004, and hire back a small percentage of the tens of thousands of employees it has laid off since late 2001. Analysts expect the nation's six largest carriers to increase capacity by as much as 4 percent -- a significant chunk of that coming from flying more frequently, not from adding more planes.
Whether or not the industry returns to profitability in 2004 will depend, Arpey says, on the economy, the price of jet fuel and business travel demand. Either way, hub-and-spoke carriers such as American and Delta are now in a much better position to compete with profitable low-cost carriers such as JetBlue and Southwest, whose discount fares and efficient operations have reset industry standards.
Carriers are experimenting with everything from new inflight entertainment systems to better quality food -- only some of which is free, as the industry attempts to distinguish between what fliers want and what they value.
"All the arrows are pointed generally in the right direction," Arpey said. "But clearly, we have a long way to go."
--AP Business Writer Brad Foss
