Airlines for America predicts 17.5 million passengers will travel on U.S. carriers globally during the week-long Labor Day travel period (Aug. 28 through Sept. 3), amounting to a 4 percent gain over the same time frame in 2018.
Labor Day airline travel is completing the projected record-breaking summer that airlines have been experiencing with a new height as well.
Washington, DC-based aviation trade organization Airlines for America is forecasting that "a record" 17.5 million passengers will travel on U.S. airlines globally during the week-long Labor Day travel period, which runs from Aug. 28 through Sept. 3. If the projection is correct, that will mean a 4 percent rise from the 16.9 million passengers estimated to have flown during the same holiday period last year.
The positive news comes to airlines as commercial aviation continues to be buffeted by challenges ranging from the grounding of Boeing 737 MAX to increasing concerns about a possible recession on the horizon.
“With fares at historic lows and customer satisfaction at historic highs, travelers continue to take to the skies in record numbers,” said A4A Vice President and Chief Economist John Heimlich during a press conference.
Strong Numbers For Labor Day
Overall, A4A's data suggests that U.S. airlines will carry an average of 2.51 million passengers per day during the week-long travel period. Friday, Aug. 30, is expected to be the busiest day of that time frame, with 2.98 million passengers flying aboard U.S. carriers.
Thursday, Aug. 29, is predicted to be the second business day of the Labor Day travel period with 2.82 million passengers, followed by Labor Day, Monday, Sept. 2, with 2.71 million passengers. Even as U.S. airlines cope with the reduction of more than 300 daily flights due to the grounding of the 737 MAX, they are adding 109,000 seats per day to their schedules to accommodate the additional 95,000 daily passengers expected during the Labor Day travel period.
In addition, A4A also noted that operating expenses are 2.9 percent less than the 4.9 percent increase in operating revenue. "Therefore, pretax profit margins rose from 7.2 percent the first half of 2018, to 9.3 percent in the first half of this year," Heimlich noted during the call.
A4A's report comes after strong load factor growth worldwide for airlines in June, as international passenger demand grew 5.4 percent versus the same period the last year -- an improvement from May 2019’s 4.6 percent annual gains, according to IATA.
All regions showed growth, led by airlines in Africa. Overall, capacity was up 3.4 percent, and load factor climbed 1.6 percentage points to 83.8 percent, IATA's report said.
June’s positive numbers reflected the Q2 rise that U.S. airlines pointed to during recent earnings reports, as exemplified by Delta Air Lines’ record-breaking quarter with load factors coming in at a whopping 89 percent.
But A4A's forecast also had a degree of caution in terms of a seeming slowdown from recent record-breaking travel.
Signs of a Slowdown
During the A4A call, Heimlich pointed to the slowdown in cargo, which is often seen as one possible indicator of recession. "Sure enough, the latest available data from the DOT, so air cargo volumes are shown by revenue ton miles flown, are plateauing earlier this year," he said.
Domestic and international volumes actually starting to see a decline, he noted.
"This is all from the perspective of US airports and you'll note that the international data lags domestic by three months, but this is something we continue to monitor very closely," Heimlich said.
In a comparison to the beginning of the year, airlines current capacity growth projections represent "a mixed bag."
"The strong demand environment and aircraft availability for some has meant an opportunity to grow faster than they had anticipated at the beginning of the year," Heimlich said. "For others, constraints in their system."
The constraints appear to be coming from the prolonged grounding of Boeing's 737 MAX and Airbus' production delays for the A321neo. As such, some airlines have had to scale back growth plans or even turn negative, Heimlich said.
"This is just to show you that airlines' capacity is very fluid," he said. "It depends on aircraft and labor availability, revenue conditions, fuel price, and other things and it will continue to change accordingly."
Specifically, net schedule reductions due to the absence of certain aircraft in the system in the third quarter exceeded 300 per day, A4A's report shows.
"That was an uptick of course from the second quarter and while we don't have a figure yet for the fourth quarter, depending on whether or not it actually turns in the four quarter, it could grow as more and more of a greater share of the schedule would have been flown in the coming fourth quarter by the MAX," Heimlich said