More and more Americans will reportedly be using airlines to get home for the Thanksgiving holidays, despite some predictions that fares are up 7 percent compared to last year. Airlines for America (A4A), the trade group representing major U.S. airlines, is predicting that 25 million passengers will fly during the 12-day Thanksgiving travel period.
A4A also is reporting another thing to be thankful for: improving year-over-year financial performance for the 10 largest U.S. airlines, with modest profitability allowing them to reinvest in their product and the overall customer experience.
A4A expects the number of passengers traveling from Friday, Nov. 22 through Tuesday, Dec. 3 to increase by 1.5 percent, or 31,000 travelers per day, from 2012. Planes are expected to be more than 85 percent full on the busiest travel days, which are Wednesday, Nov. 27 (2.42 million passengers), Sunday, Dec. 1 (2.56 million passengers) and Monday, Dec. 2 (2.36 million passengers).
“The good news for customers is that air travel costs less in real dollars today than in 2000, airlines are delivering strong on-time and baggage performance,” said John Heimlich, A4A vice president and chief economist. “More seats are returning to the marketplace to accommodate growing demand as carriers are increasing the number of available seats for Thanksgiving travel by roughly 2 percent.”
But Heimlich did not comment on a new survey by Travelocity that shows fares during the holiday period are actually up 7 percent. So more Americans are heading home for the holidays – but they are paying more to get there.
Those higher fares may be one reason the airline industry is apparently getting as healthy as a plump turkey. During the first nine months of 2013, the 10 largest U.S. carriers reported net earnings of $ 4.5 billion, resulting in a net profit margin of 4 percent — up from $ 312 million, or 0.3 percent, in 2012. Fuel remained the largest and most volatile cost for airlines, accounting for 35 percent of overall operating expenses.
U.S. airlines continue to enhance the travel experience from start to finish, despite generating modest net profit margins. Since 2010, airline capital expenditures have more than doubled from $ 430 million per month to $ 965 million per month in 2013 – an increase of 125 percent. Those improvements include new planes, lie-flat seats, Wi-Fi, improved websites and mobile applications with better booking software.