Airlines for America (A4A), the industry trade organization for the leading U.S. airlines, today announced it expects 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, a growth 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, an all-time high household net worth and historically low airfares are proving to be the perfect combination for the expected growth in summer air travel,” said A4A Vice President and Chief Economist John Heimlich. “We continue to see consumers today shift their spending towards experiences and travel, and airlines are making sure to meet this growing demand by increasing staffing and seat supply, as well as further investing in new aircraft, technology and overall customer experiences.”
Airline Revenues Up on Higher Traffic; Expenses Up on Fuel, Labor Costs
First quarter 2017 financial results for 10 publicly traded U.S. airlines (Alaska Airlines, Allegiant Airlines, American Airlines, Delta Air Lines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines, United Airlines and Virgin America), 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.
Additional financial results include:
- Operating revenues in 2017 increased 1.5 percent to $37 billion as higher passenger traffic, which grew 1.6 percent, offset lower average airfares, which have decreased 7 percent since 2014.
- Airline operating expenses increased 9.3 percent to $33.9 billion, led by a 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 for the first quarter of 2017.
As airlines see higher returns on capital, customers are seeing more seats. Airlines’ domestic seat supply is expected to increase 3.8 percent year-over-year in 2017 and international supply is projected to reach an all-time high, growing 6.1 percent year-over-year.
Additionally, since April 2015, U.S. airline job growth has exceeded overall U.S. job growth with employment rising 4 percent, more than double the rate of overall job growth. February 2017 marked the 40th consecutive month of year-over-year employment gains for full-time equivalent employees, now totaling more than 419,000.
“The growth in employment and investments in wages and benefits directly support our economy at large and our industry while also simultaneously benefiting the more than 2 million people who fly every single day,” continued Heimlich.
First Quarter 2017 Operational Performance
U.S. airlines faced several challenges with unforeseen severe weather impacting the first three months of 2017. According to the Department of Transportation (DOT’s) core operational metrics for the first quarter of 2017:
- 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 due to significant weather events during first three months of 2017.
- 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 as seen for the first quarter 2016.
