Operations

Airlines Predict Passenger Drop During Upcoming Holiday

LCT Staff
Posted on August 20, 2008

NEW YORK CITY — Major U.S. airlines will see a 6% drop in passengers during the eight-day Labor Day holiday period as high oil prices continue to roil the industry, the airlines' trade organization predicted on Monday. The Air Transport Association of America (ATA) said that although fuel prices have declined in recent weeks, jet fuel has averaged $160.47 a barrel this summer, 79% higher than last summer's price.

Crude oil has retreated from a record high above $147 a barrel on July 11 to around $114 on Monday, but that compares to roughly $72 this time last year and is still far too high for the struggling U.S. airline industry.

To survive, airlines have been making big cuts in routes, staff and capacity, as well as raising fares and introducing fees for checked bags and other services.

"High energy prices across the economy, rising air fares and airline schedule cuts are the primary drivers of the overall reduction in passenger volumes expected for this (Labor Day) period," the ATA said in a statement.

The ATA forecasts that 16 million passengers will travel globally on U.S. airlines from Aug. 27 through Sept. 3 — a decline of 5.7% from the same period last year.

The ATA predicted a 6.5% drop in domestic travel and a 1% increase in international travel over the Labor Day period.

"Economic uncertainty and the heavy hit from sky-high energy prices mean that many vacation and business travelers are choosing to stay closer to home — if they go at all," said ATA chief executive James May.

ATA airline members and their affiliates transport more than 90% of all U.S. airline passenger and cargo traffic.

Source: Reuters

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