International Air Travel On U.S. Carriers Expected To Surpass 2014 Record With 31 Million Travelers

Airlines for America (A4A), the industry trade organization for the leading U.S. airlines, today forecast that summer 2015 air travel would rise to its highest level ever while reporting that U.S. passenger airlines achieved strong operational performance and improved profitability in the first quarter despite another harsh winter.

A4A projects approximately 222 million passengers (2.4 million per day) are expected to fly on U.S. airlines from June 1 – Aug. 31, up 4.5 percent (104,000 passengers per day) from 2014. This includes 31 million travelers (332,000 per day) on international flights – a record high. To accommodate the expected growth in demand, airlines are increasing the number of available seats by 4.6 percent, or 126,000 per day, during this period.

Published airline schedules show Canada, Mexico, the United Kingdom, Germany and Japan, respectively, as the top five nonstop international destinations from the United States. Year over year, airlines are adding the most seats to the marketplace for flights between the United States and Mexico, the United Kingdom and China.

“The continued rise in U.S. consumer sentiment and employment is leading to more people traveling more often, and air travel remains one of the best consumer bargains in America,” said John Heimlich, A4A Vice President and Chief Economist. “With 13 of the 15 busiest air travel days of the year falling in the summer months, U.S. airlines are well-prepared to accommodate the increased travel demand by adding flights and seats, and deploying new and larger aircraft, along with a boost in staffing to enhance the customer experience.”

During the first quarter of 2015, 10 publicly traded U.S. passenger carriers collectively reported a Generally Accepted Accounting Principles (GAAP) net profit of $3.1 billion, or 8.4 percent, which improved from 1.1 percent during the same period in 2014. Operating revenues rose 3.1 percent year over year, due in large part to a 3.9 percent increase in the number of air travelers, which is the equivalent to an additional 72,400 passengers per day. Wages and benefits rose 10.5 percent, overtaking fuel for the top spot among industry operating expenses. While the 8.4 percent margin is an improvement over last year, it leaves the industry shy of the U.S. corporate average of 9.8 percent, as measured by the Standard & Poor’s (S&P) 500.

Heimlich noted that February 2015 was the 15th consecutive month of employment gains at U.S. airlines, having added nearly 9,500 jobs over the past five years.

Despite entering 2015 with approximately $66 billion of debt and coping with another harsh winter, meaningful financial progress enabled carriers to continue significant levels of reinvestment to further enhance operational reliability and the customer experience. First-quarter capital expenditures for the nation’s airlines totaled $3.6 billion, on track to exceed $14 billion for the full year. Collectively, these 10 airlines are slated to take delivery of 367 new aircraft in 2015, or the equivalent of roughly one per day.

“Healthy air-travel demand and lower, yet still volatile, fuel prices are helping U.S. airlines close the gap to average U.S. corporate profitability,” said Heimlich. “In the first quarter, airlines invested more than $20 per passenger in capital improvements, taking care of employees, continuing to pay down debt and returning cash to shareholders.”

FMI: www.airlines.org