After one of the worst slumps in decades, the U.S. airline industry is beginning to see demand increase, fares rise gradually and planes fly at closer to capacity.
Times are not so good for airline passengers.
The latest statistics from the Transportation Department show that flight cancellations for May jumped about 30% from the same month last year, while consumer complaints against U.S. airlines rose 23%. The data also show that the number of paying passengers denied seats on flights increased 37% for the first three months of the year.
The increased cancellations may be partly the result of airlines trying to avoid new federal penalties for airlines that strand passengers on delayed flights for more than three hours. The fines, which took effect April 29, are as high as $27,500 per passenger.
As for consumer complaints, the biggest category were gripes about — you guessed it — canceled flights.
To cut spending and increase profits, airlines have cut many of the least-profitable routes and packed the remaining flights. As a result, airlines have increased the likelihood of overbooking flights and bumping more passengers.
"The number of people getting bumped is [rising] because the airlines are pushing the system as far as they can," said Tom Parsons, founder of the airline booking site Bestfares.com.
But Parsons pointed out some good news for passengers: The Transportation Department recently adopted rules that require airlines that bump passengers to increase the compensation to as much as $1,300 per ticket, depending on how long the passenger must wait for the next flight, up from $800 currently.
However, the new compensation rules won't take effect until this fall.
Limousine firms take a beating
The decline in business travel during the recession may have stung the airline industry, but it absolutely pummeled the chauffeured limousine industry.
Over the last two years, about 45% of the nation's licensed limousine companies have gone out of business, said Scott Solombrino, president of Dav El Chauffeured Transportation Network, one of the world's largest limo companies. He estimates that about 5,000 companies operate today, down from about 9,200 two years ago.
Part of the decline can be attributed to tighter corporate travel budgets.
But perhaps a bigger reason limo companies are hurting is because business executives don't want to be seen spending extravagantly during a faltering economy. It's called the AIG effect, an expression coined after insurance giant American International Group Inc. sponsored a luxury retreat just days after accepting a federal bailout.
"No one is in a hurry to have 100 limos parked in front of their Wall Street firm or hotel," Solombrino said.
And although the industry showed some signs of improvement this year, he said the limousine industry could suffer more losses if the economy continues to sputter.
"We are worried that the economy doesn't have legs," he said. "It's touchy out there."
Marriott offers gulf guarantee
For those who fear the BP oil spill will ruin a trip to the Gulf Coast, Marriott International Inc. is offering a guarantee. Sort of.
Marriott is offering guests a hotel credit — worth about 50% of the room rate — if the spill forces local officials to close the nearest beach.
Of course, there are many conditions to the guarantee. For example, it applies only to 15 Marriott hotels along the Gulf of Mexico and it is good until Labor Day.
Also, if local government officials only limit beach access because of the spill, then the guarantee will be implemented at the discretion of the hotel.
The guarantee's fine print also points out that the credit can be used only for services and goods offered at the hotel, such as food, drinks, gifts and souvenirs, and not to reduce your room rate.
In short, if the beach is closed, the credit can go toward room service and movies in your room.