Categorized | Airlines

Airlines see profitable summer but iffy fall…

Posted on 16 June 2011

This promises to be a moneymaking summer for the airlines, with planes full of passengers paying higher fares than a year ago. But there could be a fall chill in the air.

  • A Southwest jet on approach to Chicago's Midway Airport. A Southwest jet on approach to Chicago’s Midway Airport.
  • Leisure travelers say they’re cutting back on travel because of high-priced tickets, concern about the economy and the need to spend more for everything from food to gasoline.

     

    Airlines are planning to reduce flights once summer ends. Some are already offering sales to fill their planes when vacation season is over.”We are worried about what happens after Labor Day,” says Helane Becker, an analyst for Dahlman Rose & Co. “We’re going to see less demand and more discounting.”

     

    Economists have lowered growth forecasts after recent bad economic news. Unemployment remains above 9%. Retail sales are slumping for the first time in nearly a year. Becker worries that could foreshadow a drop in leisure travel.

     

    The average flight in May was more than 83% full, an occupancy level unheard of a few years ago. And it could go higher in June, July and August. Since 2008, airlines have tightly controlled the number of seats for sale. That’s made flights fuller and let them push fares higher.

     

    Airlines need a big summer to offset jet fuel costs that are up about a third from a year ago. And they’re already preparing for the slower fall travel season. This week, JetBlue and AirTran rolled out sales that run into late 2011, indicating a need to fill seats.

     

    Henry Harteveldt, a travel analyst for Forrester Research, said airlines could cut even more flights than currently planned, making it harder to find a cheap fare. Travelers say deals are already scarce, causing them to rethink plans.

     

    Larry and Carla Brock of Pittsburgh said they paid $840 for one round-trip ticket on US Airways to Texas, where one of their sons was graduating from surgical residency at a Dallas hospital.

     

    That price “is kind of ridiculous,” Carla said. “If this (trip) was just a vacation, we’d have to think twice about it.”

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