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Carriers keep going by plying in traffic

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2005 Industry Report: Transportation

Carriers keep going by plying in traffic

Moving Thoughts

TREND: Competition in the airline industry is keeping prices low and boosting air travel in North Carolina.

OUTLOOK: The state could see a bigger influx of discount carriers or restructuring by older carriers such as US Airways to mimic low-cost carriers.

Oops! They did it again. US Airways emerged from Chapter 11 bankruptcy in March 2003 but filed for it again in September 2004. The high price of fuel, increased competition from discount airlines and high labor costs were too much for the Arlington, Va.-based carrier. Others such as Delta and United are suffering, too, but they don’t match US Airways’ presence in North Carolina.

It is Charlotte/Douglas International Airport’s biggest tenant, making up about 90% of its flights. The airline also is a major presence — and employer — at other airports around the state. Liquidation would mean losing thousands of Tar Heel jobs. Airport Director Jerry Orr says the number of daily flights in and out of the Queen City would plummet. It also would take some of the wind out of smaller airports such as those in Fayetteville and Wilmington.

If it can stay aloft, US Airway plans to make itself more like low-fare carriers such as Dallas-based Southwest Airlines — already a major player at Raleigh-Durham International Airport with 25 daily departures — or Dulles, Va.-based Independence Air, which moved into airports serving Raleigh, Greensboro and Charlotte in 2004. Analysts say discount airlines, which operate in 30% of the domestic market, could expand to 70% by 2010.

Despite the turmoil, more passengers were using North Carolina airports last year than in 2003. At the three busiest airports in the state — Charlotte/Douglas, Raleigh-Durham and Piedmont Triad International — passenger boardings were up 4% to 9% through October. Regional airports saw growth in passenger traffic, too. Fayetteville Regional Airport reported a 33% increase during the period. Wilmington International set its record for the most passengers in a month in July — breaking the record it set in June. At Asheville Regional Airport, boardings through October were up nearly 20%.

Orr attributes increases in passenger traffic to fares kept low by a glut of planes and carriers. Travelers also seem to have put aside fears of terrorist attacks, which hobbled the industry after Sept. 11, 2001. North Carolina’s second-tier airports have added flights, and Asheville Regional Airport Director David Edwards has headed an effort to convince airlines that they can add service there and still make a profit. Results: a nonstop Continental Airlines flight to Houston and nonstop Northwest Airlines flights to Detroit and Minneapolis. Using similar tactics, Wilmington International attracted three nonstop US Airways flights to New York’s LaGuardia Airport between August 2003 and August 2004.

Big construction projects are under way at the state’s three largest airports. The $500 million FedEx package-handling hub, to be completed in 2009 at Piedmont Triad International, is one of the largest airport construction projects in the nation. Work totaling nearly $1 billion is planned or under way at Raleigh-Durham and Charlotte/Douglas. A third runway should be finished at Charlotte/Douglas in two years, saving airlines more than $30 million a year by lessening delays. Raleigh-Durham is spending $350 million to double the size of a terminal by 2009.

Ship transportation will be aided by the deepening of the river channel between the Atlantic Ocean and Wilmington from 38 to 42 feet. Begun in 2000 and finished in 2004, it could increase container shipments to the Wilmington port 15% a year by luring larger ships. Overall, the state’s two ports reported a 24.5% increase in cargo during the fiscal year that ended in June. Both recorded more military traffic than in previous years by moving troops, equipment and machinery for the war in Iraq.

Despite higher prices for fuel and insurance, trucking companies thrived in 2004. Thomasville-based Old Dominion Freight Line, for example, reported a 34% increase in third-quarter net income. For the nine months that ended Sept. 30, the increase was nearly 43%. Revenue was up 22% to $600 million. The industry’s outlook is good for 2005, too. In fact, the biggest problem is finding drivers. “Most members tell me they are turning away business,” says Charles Diehl, president of the North Carolina Trucking Association. “This is becoming increasingly critical as shipping volumes increase. Trucking companies are looking for people to hire.”

Those who drive to work in Charlotte or Raleigh — but would rather not — soon will have other options. A $400 million project will bring light-rail service to Charlotte’s south side in 2006 and to its north side in 2010. The first part of the Triangle’s Regional Rail Transit System between Durham and Raleigh will open by 2008.

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