Airlines for America (A4A) forecasts a record 257.4 million passengers will fly on US airlines between 1 June and 31 August despite the grounding of Boeing 737 Max aircraft that took 200 daily flights out of service for the summer travel season.

The trade group estimates the grounding results in a loss of 35,000 daily seats for the summer travel season. Airlines with 737 Max aircraft in storage are keeping passengers flying by rerouting flights and “lightly travelled routes” have been suspended, said A4A chief economist John Heimlich on 21 May during a conference call with reporters.

Three US carriers – American Airlines, Southwest Airlines and United Airlines – operated a combined fleet of 72 737 Max aircraft before the grounding.

If there is a prolonged grounding into late 2019 then airlines may pursue “deferring retirement of aircraft and acquiring used aircraft on the marketplace if needed”, Heimlich says.

This forecast of an average of 2.8 million passengers per day for the summer travel season is up 3.4% year-on-year from 248.8 million passengers in 2018, according to A4A's forecast. Traffic on passenger flights during the first quarter of 2019 increased 4.6% year-on-year and decreased 2.1% for cargo flights.

The average inflation-adjusted domestic ticket cost declined in 2018 to $350, including fees and taxes, which is down 16% from 2014 according to the US Bureau of Transportation Statistics.

Demand for travel also looks healthy because US consumer sentiment for the start of May measured by the University of Michigan is 102.4 points, the highest index in 15 years, Heimlich says. Consumer sentiment is calculated as a metric of consumer faith in the US economy and willingness to spend.

Despite the optimistic outlook, US airlines continue to face obstacles that could offset opportunities for growth.

“It cannot be overstated how important the price of fuel is in the business,” Heimlich says, noting that expenses including costs for labour and maintenance increased in 2018 along with the cost of fuel.

The trade association is also pressuring US lawmakers to maintain the flight accessibility and low costs of travel that it credits for a continuous decrease in summer travel ticket prices over the last four years and a decade of growth in passenger flights.

A4A and five other travel industry groups are pressuring the Trump administration to stop diverting Customs and Border Protection Officers from US airports to the border with Mexico as part of its border security efforts. These industry groups sent a letter to the Senate leadership on 9 May requesting additional funds for staffing and overtime payment for border officers if they continue to be relocated to the southern border.

“We don’t think it is a good idea to pull resources from airports," says Sharon Pinkerton, A4A’s senior vice-president for legislative and regulatory policy, on relocating officers without additional funding to address their absence.

“If this is permitted to continue, it will lead to excessive lines and wait times for passengers and cargo entering the country from overseas,” Pinkerton says. “This would discourage leisure and business travel to the US and jeopardise the economic benefits that come with it.”

The trade group is also advocating against a tax increase that some airports want Congress to impose on passengers. Passengers in the US paid $3.5 billion in passenger facility charges in 2018, and doubling those fees as some airports request would mean “a family of four will have to pay an additional $72 or $144 total for a roundtrip, one-stop domestic flight”, the trade group says.

Pinkerton says US airports don’t need to raise fees because the airport sector has around $14.5 billion in cash, "they are reporting record revenues and airport construction is booming".

To keep security efficient at airports the trade group is also encouraging US consumers to register for Real ID-compliant driver’s licenses to meet the October 2020 government deadline.

Airlines are investing to increase capacity and maintain infrastructure to keep pace with demand for passenger flights. US airlines at the end of 2018 had firm orders for 1,717 aircraft valued at $88 billion, and invested several billion more in ground facilities, equipment and technology. Among US carriers, Spirit is expected to grow the most this year with a 15% increase in capacity, says A4A.

Source: Cirium Dashboard

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