September 22, 2020

US airlines add seats ahead of expected record passenger demand

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From The National

Coming off another highly profitable year in 2016, airlines expect traffic this spring to increase 4 per cent over last year, and they are adding seats to handle the crush.

The trade group Airlines for America forecasts that a record 145 million US passengers will fly between March 1 and April 30.

The group’s chief economist said traffic will rise because airfares fell over the past two years while economic indicators such as household wealth and job creation are rising.

There are signs, however, that the run of lower airfares – made possible by cheaper jet fuel – is ending.

expects a key revenue per seat figure to rise between 1.5 per cent and 3.5 per cent in the first quarter after falling throughout 2015 and 2016, and other carriers are close behind.

For the airlines, it looks like the good times will keep rolling.

Last year, US airlines carried a record 823 million passengers and earned US$22.3 billion in pretax income, down just $1bn from the stellar results in 2015.

Pretax profit margins topped 14 per cent in both 2015 and 2016. That is the closest the industry has ever been to the US corporate average – 15.8 per cent last year – according to their trade group.

As profits have recovered from the 2008-2009 financial crisis, US airlines have paid down $63bn in debt, bought hundreds of planes, added the equivalent of nearly 33,000 full-time employees, and raised wages.

The average salary at US airlines last year was $80,900, or 38 per cent above the private-sector average, according to the airlines’ trade group. However, that number is skewed by high salaries for pilots – many airline employees earn less than the average

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IMAGE: The tail sections of an American Airlines plane with new livery, left, a US Airways aircra, centre, and a traditional American Airlines aircraft are lined up at Dallas-Fort Worth International Airport. US carriers expect record passenger traffic. Mike Stone / Reuters

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