Blue skies could be in store for U.S. airlines this summer, as they will be flying a record number of passengers, according to Airlines for America (A4A), an advocate for the airline industry.
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In fact, A4A expects approximately 222 million passengers over the next few months, with another 31 million flying internationally (mainly to Canada, Mexico, the U.K., Germany and Japan), which would also be a record. For the period of June 1 through Aug. 31, that equates to a 4.5% increase (or an additional 104,000 passengers per day) from 2014.
In a press release, John Heimlich, A4A Vice President and Chief Economist said: “With 13 of the 15 busiest air travel days of the year falling in the summer months, U.S. airlines are well-prepared to accommodate the increased travel demand by adding flights and seats, and deploying new and larger aircraft, along with a boost in staffing to enhance the customer experience.”
Importantly, A4A reports that U.S. passenger airlines achieved strong operational performance and improved profitability in the first quarter of 2015 despite another harsh winter.
Many factors point to a record travel season, but not all agree records will ultimately be broken.
“The summer season is going to be busy, as there is pent up demand for corporate and leisure travel alike. I can definitely see record profits, but not a record travel season, as consumer confidence and travel statistics haven’t been as strong as in the past,” S&P Capital IQ equity analyst Jim Corridore said.
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“That being said, the season will be busy, but we are unlikely going to experience that type of congestion, and huge tarmac delays that happened in summers’ past,” notes Corridore.
He believes the busy summer season will be a positive for the airline sector as there have been lower oil prices and airlines have been practicing good capacity discipline. He adds that fewer airlines than in the past are now doing a better job of managing their businesses and schedules.
There was other favorable data for the airlines in the A4A report. According to the Dept. of Transportation, from 1Q 2014 to 1Q 2015, U.S. carriers improved the rate of completed flights from 95.4% to 96.9%, on-time arrival rate increased from 72.2% to 76.3%, and passengers having their bags properly handled rose from 99.56% to 99.61%.
Airline stocks are trailing the broader market. The NYSE Arca Airline Index (XAL) is down nearly 2% this year.