Another difficult data point for Boeing's 787 Dreamliner.

Boeing announced that it will delay the first test flight of its next-generation jetliner, the 787 Dreamliner, beyond Q4, citing the recently-ended machinists strike, Bloomberg News reported.

Further, the company set no new time frame for the plane, the test flight of which has already been delayed three times and is currently 15 months behind schedule, Bloomberg News reported. An eight-week strike with the machinists union, the International Association of Machinists and Aerospace Workers, was settled November 2, with machinists approving a new contract shortly thereafter.

The Boeing Company's (NYSE: BA) shares slid $4.09 to $49.53 Wednesday afternoon amid a broader market sell-off.

One wouldn't think someone would criticize one of the few growth sectors in the United States that has managed to remain intact and in good health during the nation's decade of economic descent, but that's what author Elizabeth Becker does.

In an op-ed article in The Washington Post, Becker argues against global tourism -- one the few bright spots in the U.S. economy, and also increasingly a source of income for many developing nations -- saying it's "a planet-threatening plague."

The U.S. unemployment rate is rising. The U.S housing sector is in its worst slump in a generation. Oil prices remain sky high. Business investment is sluggish. The investment banking community and most in the financial community in/around Wall Street, have a perpetual look on their faces of 'waiting for the other shoe to drop.' And now an argument is being made against one the U.S.'s few growth sectors -- tourism. You can just see the late Jackie Gleason, The Great One, looking down upon all this and saying, "What is the world coming to?"

There's a downside and an upside to the new air travel reality in the United States.

The downside: look for more, packed flights as airlines reduce fleets to cut costs by eliminating unprofitable flights, and with it the (remaining) empty seats on planes, The New York Times reported.

The upside: airlines are required to offer a greater payout, if you're bumped from a flight.

Airlines' load factor seen increasing

Stock analyst and frequent flier C. Leonard Bauer told BloggingStocks U.S. airlines' load factor - - the percent of seats sold per flight - - is likely to increase from its current 79% sector average. "Basic math. Considerably fewer planes and roughly the same amount of travelers means more flights close to capacity."

And overcapacity. Bauer said he expects bumps - - people with a boarding pass who can't fly because the airline overbooked the plane - - to increase during the next six months. However, bumps may trend lower in 2H 2009, if passenger traffic slows on the heels of the U.S. economic slowdown, he said.

In any event, if you're bumped, your air travel-denominated compensation will be better than it was three years ago, Bauer said, due to federally-required higher payouts. [Bauer added that he does not own shares in or have a rating on any airline or airplane manufacturer. However, Bauer does have frequent flier miles/points in American Airlines (NYSE: AMR).]

Airlines globally could lose $6.1 billion in 2008, on soaring oil prices and financial market dislocation, the head of the International Air Transport Association said, The Wall Street Journal reported Thursday (subscription required).

Giovanni Bisignani, managing director of the IATA, which represents 230 airlines, called the sector "a fragile industry in a crisis" and that it's "bracing for more situations of airlines collapsing," due to high fuel prices and lower revenue, The Journal reported. Further, the air travel slowdown, once thought to be contained to developed nations, has spread to global air travel's plum: Asia, he added.

Airline slowdown could hurt Boeing, Airbus

Stock analyst and frequent flier C. Leonard Bauer told BloggingStocks Thursday if the Asian hemisphere is slowing, to go along with sluggish revenue statistics in Europe and the United States, the slowdown "would have wide implications, not just for airlines, but for airplane manufacturers Boeing and Airbus."

"Further consolidation globally, was a given, particularly in nations like India, which had too many airlines even before the global economy slowed, but the concern now is that national carriers will postpone or cancel plane orders," Bauer said. "From a U.S. perspective, that could mean bad news for Boeing. And what's bad news for Boeing is bad news for the U.S economy. Airplane sales have been one of the U.S. economy's few bright spots." [Bauer added that he does not own shares in or have a rating on any airline or airplane manufacturer. However, Bauer does have frequent flier miles/points in American Airlines (NYSE: AMR).]

American Airlines, British Air and Spain's Iberia have signed a joint business agreement on flights between North America and Europe, American Airlines announced Thursday.

American (NYSE: AMR) added that the three airlines plan to file for global antitrust immunity from U.S. officials and will also apply from the same in Europe.

Under the deal announced Thursday, the three airlines will cooperate commercially on flights between the United States zone (encompassing Canada and Mexico) and the European Union (including Switzerland and Norway), while continuing to operate as separate, legal companies.

Analyst: 'an absolute, positive, must deal'

Stock Analyst C. Leonard Bauer told BloggingStocks Thursday rival competitors may argue that the deal will reduce competition internationally, but in Bauer's interpretation the agreement is "an absolute, positive, must deal," due to the changing nature of flight and air travel.

"The reality is, we're becoming a global travel marketplace, not just a national one, one that will eventually be accessible to everyone, and in this decade the key players will compete on transcontinental and global routes," Bauer said. "That means the carriers need global scale and the American-British Air-Iberia deal accomplishes that. It is an absolute, positive, must deal." (Bauer added that he does not have a rating on nor own shares in any airline. However, Bauer does have frequent flier miles/points in American Airlines.)

Investors and readers are probably aware of production snags that have delayed two next-generation airplanes, Airbus' A380 Superjumbo and Boeing's 787 Dreamliner.

But now there's word of production delays for two existing aircraft, Airbus's A330 and Boeing's 777.

A shortage of seats, toilets, and galleys is slowing down A330 and 777 assembly lines, The Wall Street Journal reported Friday (subscription required). Managers at the world's two rival commercial aviation giants suggest the snags could affect this year's financial results, but neither company has issued an earnings warning.

Shares of Boeing (NYSE: BA) gained $1.87 to $66.56, while shares of Airbus' parent EADS rose 1.27 euros to 14.85 euros on the Paris Exchange, in Friday afternoon trading.

Contractor ramp-up issues

For Boeing and Airbus, the crux of the problem stems from the relatively small size of the contractors producing equipment such as jetliner galleys, toilets and business-class seats, The Journal reported. Stock Analyst C. Leonard Bauer told BloggingStocks Friday the problem Boeing and Airbus face is "an upside problem," but a problem nonetheless.

"It's called the problem of success. Jetliner orders and deliveries have risen more than 40% in five years and contractors are straining to keep up," Bauer said. "It had to happen sooner or later, because it's hard for contractors to in some cases double production of a part in two or three years." Bauer added that he does not have a rating on nor own shares in Boeing or Airbus.

Given the smorgasbord of economic demands and concerns -- domestic and foreign -- likely to face the new U.S. president, investors (and taxpayers) can justifiably ask 'Where's all the money going to come from to pay for these programs?'

Legitimate question, but one, for now, we'll let the political process sort out. (Current Gallup Daily Tracking Poll as of August 6, 2008, for the U.S. presidential election: Obama, 46%, McCain, 44%.)

Electing U.S. Sen. Barack Obama, D-Illinois, or U.S. Sen. John McCain, R-Arizona, will produce different programs and revenue priorities, due to the parties' different sources of power, but the argument forwarded here is that -- regardless of who becomes the new president -- the office holder should address transportation in a comprehensive way. Here are the major concern areas:

• Mass transit: We're early into the $4 gas era, of course, but initial U.S. Department of Transportation data indicates Americans are driving less and using mass transit more. The trouble is, many mass transit systems (rail, commuter rail, subway, bus) need to be expanded/upgraded to handle the increased ridership. Bigger, better mass transit systems will save the United States hundreds of billions of dollars in oil costs, not to mention the environmental benefits.

These days in commercial aviation, airlines are finding ways to operate more efficiently amid the toughest sector conditions since the first oil shock in 1973-74.

And while there's no love lost between passengers and the major carriers' unconventional way of increasing total consumer flying costs by adding separate baggage fees, there's one a-la-carte fee the public may be willing to pay for: a fee for internet access on airplanes.

Delta Air Lines (NYSE: DAL) announced it will start offering broadband internet service on domestic flights as early as October, The Washington Post reported Wednesday. Other airlines, including Continental (NYSE: CAL), Southwest (NYSE: LUV), and Virgin America are planning or testing internet services. (Delta will merge with Northwest Airlines (NYSE: NWA), pending U.S. Justice Department approval.)

Analysts generally credit JetBlue (NASDAQ: JBLU) with raising coach class amenity standards for flights in the United States when it introduced satellite TV and other services on its flights.

Delta's service will cost a $9.95 flat fee for flights lasting three hours or less and $12.95 for flights longer than three hours.

Public seen receptive to Wi-Fi fee

Stock analyst and frequent flier C. Leonard Bauer says Internet fees would be "a lucrative revenue stream" for the airlines, and ironically one that will probably be popular with the public.

What's one over-the-horizon trend that passengers (and investors) would be wise to monitor closely? Micro airlines.

Micro airlines will be small carriers that target the leisure travel market, stock analyst and frequent flier C. Leonard Bauer told BloggingStocks Tuesday.

Bauer is quick to point out that these carriers don't exist today -- the commercial aviation sector's financials can't currently support them -- but when design advances (including composites), increased engine efficiency, and a drop in oil and aviation fuel prices turn in the airline sector's favor, look for micro carriers to sprout, he predicted.

A streamlined air itinerary

Further, Bauer doesn't count current 'regional airlines' or 'express airlines' such as United Express as micro airlines because micro airlines will differ from the former in one significant way: "They'll have vastly reduced check-in times compared to regional airlines," Bauer said. "For a portion of the leisure travel public, this will be the deal-clincher." Bauer added that he doesn't own shares in nor have a rating on any airline.

What's holding the airline sector back, in addition to high jet fuel prices, and keeping the likes of AMR's (NYSE: AMR) American, Delta (NYSE: DAL), UAL's (NYSE: UAUA) United, Southwest (NYSE: LUV), and Continental Airlines (NYSE: CAL) from realizing their potential?

Many economists and analysts would agree that, along with other infrastructure and related investments, the nation's air traffic control system must be upgraded, if the United States seeks an air transportation system capable of maintaining a high level of safety -- and better service -- in the 21st century's more-crowded skies.

Further, that the United States has not already replaced an essentially generation-old air traffic control technology with a modern system is a serious demerit, and one that has -- through delays, cancellations, and other problems -- taken a toll on the flying public and the major carriers.

These are tough economic times for the nation, most would agree, and one hard-hit sector has been the airline sector, specifically the major carriers.

Surging fuel costs, the increased precautions and reviews required for the post-September 11 era, and intensifying competition for international routes has led to large losses among many major carriers - - a condition that has forced them to raise fares and implement other cost-cutting changes.

Most have also instituted a baggage fee for a passenger's second bag, with some carriers charging for all bags. Still, for the most part travelers have taken the baggage fees in stride. Although viewed as a nuisance by many travelers, the reality is a second bag, in particular, is optional weight that increases flying costs per mile. And with aviation fuel zooming past latte-price levels, that's no significant expense.

Still, US Airways Inc. may have gone one too far with the fee system. Effective today, US Airways will start charging for water on flights by coach passengers, The Wall Street Journal reported Friday (subscription required). Bottled water will be $2. Passengers flying first class are exempt from the extra fee.

No, the airlines haven't started charging by the pound. At least not yet...

Jokes aside, nobody told the airlines there'd be days like these, to paraphrase John Lennon.

Jet fuel costs -- up 84% in the past year alone -- have skyrocketed, along with the cost of just about every other product derived from the world's most vital commodity, and the airlines are looking for every conceivable way to reduce weight, reduce wind/resistance drag, and increase operational efficiency, The New York Times reported Wednesday.

The major carriers are replacing heavier seats with lighter ones, cleaning engines and planes more often, reducing the fresh water available on flights, and plugging into electric outlets instead of idling engines at the gate, among other changes, in order to cut fuel consumption.

More air travel changes ahead

Moreover, the changes -- and charges -- have only just begun, so says stock analyst C. Leonard Bauer. "Everyone knows about the added bag charges, a pain in the neck, for sure. But it could get worse," says Bauer, who also flies on a major carrier about 5-7 times per year. "In the winter you could see a per pound baggage charge, or something along those lines. So don't pack that extra winter coat when you fly this December."

Airbus said 2008 orders for the A380 superjumbo jet may be one-third lower than previously forecast, as higher fuel costs and an economic slowdown moderate travel growth, Bloomberg News reported Wednesday.

Airbus said it may receive about 20 orders in 2008 for the 525-seat A380 superjumbo, the world's largest commercial jetliner. Earlier, Airbus had projected up to 30 orders for the A380 in 2008.

Airbus' announcement did not negatively impact the stock, at least not at the outset. Shares of Airbus' parent EADS gained 28 cents to 14.95 euros in Wednesday afternoon trading on the Paris exchange.

The oil surge, which gives new indications daily that it's evolving into the world's third oil shock, bodes tougher times for airlines, and travelers alike, many analysts agree.

Moreover, those tougher times may propel "creative and avant-garde" ideas and strategies to cope with the more-challenging flying environment, by both airlines and travelers, so says C. Leonard Bauer, independent stock analyst.

American Airlines (NYSE: AMR) took the first, bold - - and controversial - - step in the 'era of new flying rules' by announcing that it would charge passengers $15 each way to check their first bag, The Dallas Morning News reported. American also reduced its flying schedule by 11-12% at the same time.

Bauer said travelers should brace for more a-la-carte changes from the major carriers, and some truly creative ones, at that. "The airlines will be looking at every way to reduce fuel usage and cover those expenses from added weight," Bauer said, "When oil was at $20 a barrel, weight was a cost factor, but now at more than $125 a barrel, it's a going-concern factor. These high fuel costs can and will force some airlines out of business if they can't recover these costs. 'Light flight' is in." Bauer added that he does not have a rating on nor own shares of any airline.

United Airlines, the second largest U.S. carrier, increased almost all domestic airfares by 3-5%, due to surging fuel costs, The Associated Press reported Friday.

It was the third increase in the past two weeks, The AP reported, for United (NYSE: UAUA), which like the U.S.'s other major carriers, is struggling to maintain a viable business model amid the largest increase in aviation fuel costs since the world's second oil shock in 1979-80.

Shares of United fell 82 cents to $14.58 on the news in Friday afternoon trading.

United's latest fare hike takes place just two days after Delta Air Lines (NYSE: DAL) CEO Richard Anderson said domestic carriers will need to raise tickets 15-20% just to break even at existing fuel prices, The AP reported.

Surging fuel costs

Independent stock analyst C. Leonard Bauer, formerly of Prudential, said cost factors affecting aviation will create a stark travel choice for business and leisure travelers, at least for the immediate future, including this summer: if you're flying a few months from now, there's an 80-90% chance you'll pay considerably more, he said.

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