A record number of Americans are expected to take flight this spring, as cheap fuel and more seats push down the cost of air travel, according to a new report.
The aviation industry trade group, Airlines for America (A4A), projects that around 140 million passengers will fly in March and April 2016, about 2.3 million passengers each day. That’s a three percent increase for the industry from the same period last year.
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“The continued growth in passenger volumes can be attributed to the accessibility and affordability of air travel today,” said John Heimlich, A4A’s chief economist, in a statement. “To meet the extra demand, airlines are deploying new and larger aircraft on many routes.”
The 10 publicly traded U.S. airlines collectively reported pre-tax earnings of $23.2 billion in 2015, up 14.6 percent from the year before. Even though operating revenues were flat, profits improved thanks to a $14 billion (or 9.5 percent) drop in operating expenses driven in large part by cheaper fuel.
Airlines have been responding to the increase in demand by adding seats. Fares were down 5.1 percent in 2015 for the 10 largest U.S. airlines, and the number of passengers grew by 4.4 percent.
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But don’t expect airline prices to go much lower. Once oil prices rebound, airlines could have trouble sustaining profitability as costs increase. Even now, some investors are concerned that fares have dropped too much, and that airlines are flirting with another round of ruinous fare wars.
