By Joe Brancatelli
April 4, 2013 --The business-travel world is shrinking. Literally. And not only because airlines are squeezing us into smaller seats.

Fewer of us are traveling than anyone once imagined, there are fewer flights than ever before and government-compiled statistics for the state of the commercial airline system in 2012 indicate that substantial growth isn't coming anytime soon.

According to the Bureau of Transportation Statistics, which does a remarkably good job of delivering travel numbers in palatable bites, U.S. airlines carried 736.6 million passengers last year. Not only was that essentially flat compared to 2011—nationwide traffic increased just 0.8 percent—it's a far cry from the rosy predictions issued in 2000.

Experts then insisted that the nation would vault the one-billion-flyer mark by 2011. And they pegged annual growth rates between 3.6 and 5.5 percent. Or as a contemporaneous Reuters dispatch from March, 2000, called: "U.S. sees uninterrupted growth in air travel."

What's happened in the intervening baker's dozen of years to sour us on flying? Oil prices are a major factor. In 2000, OPEC struggled to keep a barrel of crude in the $22-$28 "price band." But with energy costs accounting for as much as 40 percent of an airline's operating budget, oil at today's price of about $97 a barrel isn't exactly encouraging carriers to keep fares low. Higher fares don't motivate many discretionary travelers and they make business travelers much more careful when weighing the value of a trip.

The terrorist attacks of September 11, 2001, and the massive airport security bureaucracy it helped spawn hasn't encouraged many of us to be happy wanderers, either. Air travel naturally plummeted immediately after 9/11 and helped destroy the bullish predictions of just 18 months earlier.

Another factor: the Internet. Although no one can be sure of how many trips it has displaced, a more- and better-wired world requires less business travel.

But some of the lost travel momentum is the fault of the airlines themselves. Quite apart from how they treat us, the serial merging that airlines do eventually depresses traffic. The combined passenger load on United Airlines, which last year limped through its botched merger with Continental Airlines, fell by 3.4 percent. The downward trend may even be accelerating since United's enplanements (that's industry jargon for when one of us steps on one of their planes) fell by nearly twice as much (6.4 percent) in December, 2012.

United's case isn't a one-off, either. Southwest Airlines, which has been slowly absorbing AirTran Airways since it purchased the Atlanta-based carrier in the fall of 2010, saw AirTran's traffic fall 11.6 percent last year. Southwest's own traffic only rose 1.5 percent. Combined, the two carriers handled a million fewer flyers than in 2011. Traffic at Delta Air Lines grew 2.6 percent last year compared to 2011, but it is smaller now than when it merged with Northwest Airlines in 2010. And with US Airways (NYSE: LCC) in the midst of gaining approvals for its reverse merger with American Airlines (NYSE: AMR), you can assume the combined carrier will eventually shrink, too.

The contraction of air travel does have some benefits, however. For one thing, airlines are now mostly (if thinly and tentatively) profitable. Some analysts think that the industry might have even have turned a cumulative profit in the first quarter. If so (airlines report earnings later this month), that would be an unprecedented sign that the historically unprofitable commercial-airline industry may have finally stabilized after tens of billion in losses since 9/11.

And a smaller airline system—OAG, the industry schedule-keeper, says there are now fewer scheduled flights than at any time in the last decade—has benefits for us. The remaining aircraft plying the nation's skies may be more crowded than ever—airlines reached a record-high 81.5 percent "load factor" in December, the government saysbut they are running closer to schedule than ever before, too.

Last week, while business travelers were scurrying home for the Easter holiday, the industry racked up truly impressive on-time numbers. According to FlightStats.com, 90.38 percent of the nation's 24,301 flights operated within 15 minutes of their schedule on Friday, March 29. The next day, with fewer flights (20,805) and continued good weather nationwide, the industry registered a 90.03 on-time rating.

No one I talked to can remember a day when the industry got it right nine out of ten times, let alone two consecutive days of such timely operations. As recently as a decade ago, the airline on-time average was about 67 percent.

But the let's-get-small approach isn't a blanket nationwide trend. According to the government report, Atlanta's Hartsfield-Jackson Airport continues to grow. It's already the busiest airport in the nation and hosted 45.1 million flyers last year, 3.2 percent more than 2011. The long-time industry leader, Chicago/O'Hare, is far off the pace now, with 29.8 million "enplanements," essentially the same as 2011. Last year's big traffic gainer: San Francisco, where traffic grew 6.6 percent to 18.5 million flyers. Among the nation's ten busiest airports, three (Phoenix, Las Vegas and Houston's Bush Intercontinental) suffered year-over-year passenger declines.

The picture is different if you're an international business flyer. Miami is the nation's busiest airport for international enplanements on U.S. airlines. It handled 5.6 million customers last year, up 4.6 percent from 2011. The New York area's two international airports handled 8.8 million flyers (4.9 million at John F. Kennedy and 3.9 million at Newark). But the big gainer was again SFO, where 1.8 million travelers last year boarded U.S. airlines for international destinations. That's 7.7 percent higher than in 2011.

What's it all mean? I don't know. But historical statistics show that April through August is the busiest period for flying. April, May and June is when business travelers are most frequently in the air. July and August is when vacation travelers control the airports.

So let's talk again in September.

ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.

THE FINE PRINT This column is Copyright © 2013 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2013 by Joe Brancatelli. All rights reserved.