Air travel is about to set a record this summer.
According to new data from airline trade organization Airlines for America (A4A), a record 234.1 million passengers — or approximately 2.54 million per day — will travel worldwide on U.S. airlines between June 1 and August 31, an increase of 4 percent over last summer’s 224.8 million travelers. Accordingly, airlines are adding 123,000 seats per day across their networks to accommodate the 100,000 additional daily passengers expected to fly on U.S. carriers during this period.
“Rising U.S. GDP, a steadily improving economy, all-time high household net worth and low airfares are fueling the expected growth in summer air travel,” said A4A Vice President and Chief Economist John Heimlich in a written release.
First quarter 2017 financial results for nine publicly traded U.S. airlines (Alaska Airlines, Allegiant Airlines, American Airlines, Delta Air Lines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines and United Airlines), show reported pre-tax earnings of $2.4 billion, down from $4.8 billion in 2016, resulting in a margin of 6.6 percent, down from 13.2 percent in 2016. Airline profitability remains substantially below Starbucks, Apple and McDonald’s, A4A said.
Additional financial results include:
- Operating revenues increased 1.5 percent to $37 billion as 1.6 percent higher passenger traffic offset 0.8 percent lower average airfares.
- Airline operating expenses increased 9.3 percent to $33.9 billion, led by 24.3 percent growth in fuel costs and a 6.7 percent increase in employee wages and benefits, which rose to $3.72 billion per month in the first quarter.
As airlines see higher returns on capital, customers are seeing more seats, A4A said. Published airline schedules show domestic seat supply up 3.8 percent year-over-year in 2017 – to its highest level in 10 years – and international seat supply up 6.1 percent, to an all-time high.
Additionally, since April 2015, U.S. airline job growth has exceeded overall U.S. job growth. In recent months, airline employment has risen 4 percent, more than double the rate of overall U.S. job growth. February 2017 marked the 40th consecutive month of year-over-year employment gains for full-time equivalent airline employees, now totaling more than 419,000.
First Quarter 2017 Operational Performance
U.S. airlines posted strong operational results despite severe weather hampering operations during the first three months of 2017, A4A said. According to the Department of Transportation (DOT) Air Travel Consumer Report:
- U.S. airlines completed 98.24 percent of all flights, similar to the 98.28 percent seen during the first quarter of 2016;
- Airlines posted an on-time arrival rate of 79.42, down from 82.11 percent in the prior year;
- Airlines properly handled 99.74 percent of bags, up from 99.72 percent during same quarter in 2016;
- The rate of involuntary denied boardings fell to 0.616 per 10,000 passengers from 0.621 during the first quarter 2016.