By Kim Smiley

American Airlines resumed a normal flight schedule Saturday afternoon, ending a period of widespread flight cancellations.  Between April 8 and 12, 3,300 flights were canceled when all MD-80 jetliners in the American Airlines fleet were grounded.    More than a quarter of a million passengers were affected by the widespread flight cancellations.  As discussed in a previous blog, these drastic measures were taken when a large percentage of inspected MD-80s failed to meet FAA regulations on wiring from the airframe to a pump in the wheel well.  The wiring can be a fire hazard and affect power distribution. An intermediate level Cause Map showing the causes of the cancellations can be seen in the previous blog posted on April 10.

The cancellations may be over, but the effects will continue to linger.  The cost to the American Airline is estimated to be in the tens of millions of dollars.  In addition to lost revenue, American Airlines gave many inconvenienced passengers $500 travel vouchers and paid to put stranded travelers in hotels.  It is also difficult to put a financial cost on the huge amount of negative publicity that the airline has received as a result of these cancellations, but it is guaranteed to affect their business.  In addition to the financial burden of these cancellations, the entire airline industry is faced with raising fuel costs and this is going to put even more pressure on American Airlines.  Already, American Airlines announced on Friday (ironically on a day when nearly 600 flights were canceled) that it will be raising prices by as much as $30 a round trip tickets to help compensate for high fuel costs.  These dual blows to the bottom line are going to affect the health of the American Airline company for the foreseeable future.

It is also likely that many other airlines will be similarlly affected.  Doing a root cause analysis, it is clear that one of the causes of these cancellations is a new focus by the FAA on “zero tolerance” for any deviations from their detailed regulations.  As airlines struggle to understand the new inspection criteria, it is likely that other airlines will face cancellations.  The airline industry as a whole is facing some high hurdles in the upcoming months.  Four discount carriers have already declared bankruptcy in the last month and it is likely others will follow suit.  Even the established, traditional carriers are seeking changes to stay competitive.  For example, rumors are circulating about a possible Northwest and Delta merger.  This is going to be a turbulent time for Airlines and passengers.