Airlines for America (A4A last week projected that 25.3 million passengers will travel globally on U.S. airlines during the 12-day Thanksgiving travel period, the highest number since the Great Recession. To accommodate the increase, airlines are adding capacity, in the form of larger planes and additional routes, and investing further in the customer experience.
The Thanksgiving air travel period extends from Friday, Nov. 20 through Tuesday, Dec. 1. A4A expects the number of air travelers during this time to increase 3 percent from the 24.5 million estimated 2014 Thanksgiving air travelers, averaging an additional 65,000 passengers per day. Accordingly, airlines are deploying a commensurate amount of additional seating capacity. Daily passenger volumes will range from 1.4 million to 2.7 million, with the busiest travel days in ranked order expected to be Sunday, Nov. 29; Monday, Nov. 30; and Wednesday, Nov. 25. The lightest travel days are Thursday, Nov. 26, and Friday, Nov. 27.
“As competition continues to boost schedules and drive down airfares in 2015, customers are seeing more opportunities to fly during the holiday season,” said A4A Vice President and Chief Economist John Heimlich. “Airlines are taking delivery of new, larger aircraft to accommodate the increase in passengers.”
Continued Profitability Allows Airlines to Reinvest More, Benefiting Customers, Employees, Investors and U.S. Economy
During the first nine months of 2015, the 10 largest publicly traded U.S. passenger carriers (Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines, United Airlines and Virgin America) reported pre-tax earnings of $18.8 billion, resulting in a margin of 15.6 percent – up from 7.7 percent in 2014. On a net basis, the group reported $17.9 billion in earnings or 14.8 percent of revenues – up from 5.7 percent in 2014.
Lower fuel costs more than offset flat operating revenues, which rose just 0.3 percent year over year. Fuel, which accounted for 24 percent of operating costs, fell 36 percent over last year, which helped drive down total operating expenses by 8.8 percent. The largest operating expense, employee wages and benefits, rose 11.2 percent as airlines invest more in the workforce. Year over year, airlines have added more than 9,000 employees to the payrolls, and the 10 carriers listed above are spending $3.2 billion per month on wages and benefits.
Capital expenditures for the first nine months of 2015 totaled $12 billion, or an average of $1.3 billion per month – the highest rate of reinvestment in at least 15 years. Benefits to customers include offering in-seat power, Wi-Fi services and in-flight entertainment on aircraft; adding bigger, newer planes to their fleets (this year alone the airlines will add 367 new planes); adding 265 new destinations (as of July 2015); and quality culinary dishes often created by local chefs.
“With operations improving, airfares falling and new aircraft entering the fleet at a steady pace, 2015 has translated to an improving experience for airline customers,” said Heimlich. “Employees and investors, too, have benefited as falling operating expenses continue to improve the industry’s financial wherewithal.”
The Time Has Come for True Air Traffic Control Reform
A4A said one way to build on the strong operational performance for U.S. airlines would be to deliver a modern and efficient Air Traffic Control (ATC) system for customers through the FAA reauthorization process. A4A supports adopting a federally chartered, non-profit organization, similar to those utilized by other countries, as the best way to achieve the efficiencies customers deserve and the accountability stakeholders need while continuing to set the gold standard for safety around the world.
Sharon Pinkerton, A4A Senior Vice President of Legislative and Regulatory Policy, said the United States can no longer afford to continue to rely on an outdated WWII-era system to support such a major economic driver. Right now, relying on antiquated technology is costing passengers and airlines $30 billion annually in delays, cancellations and lost productivity. As the world’s leader in aviation safety, now is the time for Congress to deliver transformational reform to ensure the United States is also at the forefront of ATC technology and innovation.
"After decades of debate, a seemingly endless string of bureaucratic missteps and billions of taxpayer dollars spent to modernize our ATC system, now is the time for leaders in Washington to take real bipartisan action," Pinkerton said. "We can’t afford to maintain the status quo, further delay reform and spend untold billions of additional dollars on a system that needs transformation. Reforming the ATC system now will reduce delays and operational costs, allow the FAA to focus on its most important priority – safety, and bring U.S. aviation back to the forefront of innovation and aviation technology."
Annually, commercial aviation helps drive nearly $1.5 trillion in U.S. economic activity and more than 11 million U.S. jobs. Airlines for America (A4A) vigorously advocates on behalf of the American airline industry as a model of safety, customer service and environmental responsibility and as the indispensable network that drives our nation’s economy and global competitiveness.
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