Four years ago, Robert Fornaro sensed some relief in the topsy-turvy airline business — or at least his airline's piece of it. AirTran Airways was making money and growing rapidly. Experts insisted the price of oil, the industry's lifeblood, couldn't go over $30 a barrel.
Now AirTran's chief executive, Fornaro told a crowd at the University of Tampa's annual Fellows Forum on Wednesday that watching the price skyrocket past $100 taught him a lesson. "You need people who can see around corners," he said.
Fornaro, 54 and the father of a UT freshman, later talked with the St. Petersburg Times about alternative jet fuels, extra baggage fees and what else he sees around the corner for airlines.
Richard Branson, president of Virgin Atlantic Airlines, made a splash last month when one of his 747s flew on a mix of 20 percent fuel from the oil of coconuts and Brazilian babassu, nuts and 80 percent regular jet fuel in one engine. Was this a breakthrough?
We're a long way from biofuels as an alternative to the current situation. The Branson effort has a lot of pizzazz, but it will not change the fundamentals in the short run. I'll tell you what's good about what Branson did: People starting thinking about it. He's bringing attention to it and he's got the skill to do that.
You've cut back growth plans for the next two years to 5 percent. Was that driven by rising fuel costs, worries about a recession or both?
A lot of it is fuel, and that creates a lot of issues. As commodity prices rise, it does raise our costs, which means it will force up our fares. And at that point, it makes expansion more difficult. You go into a new market and it takes longer to build a profit. You'll see customer resistance. Ultimately, there's a limit to how quickly you can raise the revenues.
United and US Airways now charge $25 to check a second bag. Can we expect airlines to add more fees for stuff we used to get free? Is AirTran headed in that direction?
When you're in a situation where costs are rising so fast, you really have to keep an open mind to everything. We charge for telephone (ticket) sales. We have assigned seating … and if you buy a deeply discounted seat, we will sell you the reservation at that time for $6. But we don't want to become a company that's difficult to do business with. We are studying what competitors are doing. I'm not sure we'll go down that path. We certainly don't believe the $25 (for a checked bag) is the right number.
Are fewer people flying with fares up and economic concerns? How's your Florida business?
There's a belief the economy is weakening. It's hard to tell. Revenues are actually pretty good. (In Florida) we're having a fairly good winter. At AirTran, probably 35 to 40 percent of our customers are going in and out of Florida, all destinations. So far, demand is up a little bit more than last year.
Steve Huettel can be reached at firstname.lastname@example.org or