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Labor Day 2016 - U.S. Air Travel Forecast

  • Published by Ozgur Tore

airport gateAirlines for America (A4A), the industry trade organization for the leading U.S. airlines, projected that 15.6 million passengers will fly in scheduled service on U.S. airlines over the Labor Day holiday period, a 4 percent increase from the 2015 Labor Day period. See the infographic for colorful details.

A4A says airline will accommodate the growth in travel demand by offering 2.54 million seats per day, an increase of more than 98,000 from the same period last year.

During the seven-day Labor Day travel period (from Wednesday, August 31, through Tuesday, Sept. 6), A4A expects 2.23M air travelers a day will take to the skies, up approximately 82,000 per day from the same period in 2015. Friday, Sept. 2 and Thursday, Sept. 1, respectively, are expected to be the busiest days of the period. Expanded schedules and continuing declines in air fares are driving the projected increase.

Air travel remains one of the best consumer bargains out there given its superior speed and price versus other modes of travel, as fares were down 5.2 percent systemwide in 2015 and down 6 percent the first so far in 2016.

A4A LaborDay forcast2016

Ten U.S. passenger airlines – Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit, United and Virgin America – collectively reported a pre-tax profit of approximately $12 billion, up from $11.3 billion during the same period of 2015. This translated to a profit margin of 15.5 percent, or 15.5 cents on every dollar of revenue. The year-over-year improvement was fueled by a 1.9 percent drop in operating expenses, with falling fuel prices making up for the increased labor, aircraft and airport costs.

Since the 2008-2009 recession, U.S. airlines have been closing the gap to achieve average corporate profitability. The 2015 period was the narrowest gap on record, with U.S. airlines at 14.1 percent and all U.S. corporations with an average of 16.5 percent.

In the first half of 2016, these 10 airlines collectively reinvested $9 billion – $1.5 billion per month – to enhance the customer experience, primarily through the acquisition of new aircraft. These carriers alone are taking delivery of 366 new aircraft over the course of 2016. Onboard investments include larger overhead bins, lie-flat seating in selected cabins, AC and USB outlets, expanded Wi-Fi and inflight entertainment systems, among others. Additionally, airlines are investing in the passenger experience on the ground, with improved airport check-in areas, gate amenities, ground equipment and baggage systems. Investment in the workforce has also increased substantially with employee wages and benefits rising 35 percent since 2010, from $2.55 billion per month to $3.44 billion.

Passengers have responded positively to these new investments, with J.D. Power in May reporting airline customer satisfaction at a 10-year high and the American Customer Satisfaction Index® (ACSI) in April reaching its highest level in 22 years. The findings of these two independent reports are consistent with those of the December 2015 Ipsos survey commissioned by A4A, which indicated that 80 percent of 2015 flyers were satisfied with their overall travel experience.

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