Estimated 234 Million Flyers between June and August Will Represent an All-Time High
Airlines Report Lower Pre-Tax Earnings as Higher Costs Outpace Revenues
WASHINGTON, May 18, 2017 – 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, an increase 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, all-time high household net worth and low airfares are fueling the expected growth in summer air travel,” said A4A Vice President and Chief Economist John Heimlich. “We continue to see consumers value experiences and travel, and airlines are responding accordingly by increasing staffing and boosting the availability of seats in the marketplace, as well as further investing in new aircraft and customer-facing technology.”
Airline Revenues Up on Higher Traffic; Expenses Up on Fuel, Labor Costs
First quarter 2017 financial results for 9 publicly traded U.S. airlines (Alaska Airlines, Allegiant Airlines, American Airlines, Delta Air Lines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines and United Airlines), 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 increased 1.5 percent to $37 billion as 1.6 percent higher passenger traffic offset 0.8 percent lower average airfares.
- Airline operating expenses increased 9.3 percent to $33.9 billion, led by 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 in the first quarter.
As airlines see higher returns on capital, customers are seeing more seats. Published airline schedules show domestic seat supply up 3.8 percent year-over-year in 2017 – to its highest level in 10 years – and international seat supply up 6.1 percent, to an all-time high.
Additionally, since April 2015, U.S. airline job growth has exceeded overall U.S. job growth. In recent months, airline employment has risen 4 percent, more than double the rate of overall U.S. job growth. February 2017 marked the 40th consecutive month of year-over-year employment gains for full-time equivalent airline employees, now totaling more than 419,000. [March data will be released on May 18.]
“The growth in employment and investments in wages and benefits directly support our economy at large 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 posted strong operational results despite severe weather hampering operations during the first three months of 2017. According to the Department of Transportation (DOT) Air Travel Consumer Report:
- 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 in the prior year;
- 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 during the first quarter 2016.
* U.S. airline enplaned passengers
Airlines for America (A4A) advocates on behalf of the leading U.S. airlines, both passenger and cargo carriers. A4A works collaboratively with industry stakeholders, federal agencies, the Administration, Congress, labor and other groups to improve aviation for the traveling and shipping public.