US airlines expect profitable summer

This promises to be a moneymaking summer for the US airlines, with planes full of passengers paying higher fares than a year ago. But there could be an autumn chill in the air. Leisure travellers say they're cutting back on travel because of high-priced tickets, concern about the economy, and the need to spend more for everything from food to gasoline. Airlines are planning to reduce flights once summer ends. Some are already offering sales to fill their planes when vacation season is over. "We are worried about what happens after Labour Day," says Helane Becker, an analyst for Dahlman Rose & Co. "We're going to see less demand and more discounting." Economists have lowered growth forecasts after a bunch of recent bad economic news. Unemployment remains above 9 per cent. Retail sales are slumping for the first time in nearly a year. Becker worries that could foreshadow a drop in leisure travel, offsetting continued strength in business travel. People who bought their airline tickets before those grim headlines helped push May air traffic above last year's levels, especially on international routes. Discount airlines including Southwest and JetBlue grabbed a bigger share of the US market as vacationers and even business travellers tried to save money. Nancy Ruby, a customer-service trainer for a nationwide retailer, used to fly United but was taking Southwest from Dallas to Baltimore this week. "It's not a corporate policy, but my company has encouraged us to book as far in advance as possible to get lower fares," she said. And she's been travelling on Southwest more often to avoid fees on checked bags and reservations changes. Travellers like Ruby helped Southwest boost its May traffic 10.9 per cent over a year ago. JetBlue increased traffic 10.6 per cent, but growth was much slower at Delta and American and traffic fell slightly at United and Continental. Whether their traffic was up or down, higher airfares boosted revenue. United Continental Holdings Inc said revenue per seat jumped 14 to 15 per cent from a year ago, and that doesn't even include money from extra fees. The same measure was up 11 to 12 per cent at Southwest Airlines Co and a stunning 19 per cent at JetBlue. The average flight in May was more than 83 per cent full, an occupancy level unheard of a few years ago. And it could go higher in June, July and August. Since 2008, airlines have tightly controlled the number of seats for sale. That's not only made flights fuller, it's allowed the airlines to push fares higher. And they're making more from fees $5.7 billion last year from fees on checked bags and reservation changes, the government said this week. The airlines need a big summer to offset jet fuel costs, which are up about one-third from a year ago. If fuel stays at $3 a gallon, the industry's bill for 2011 will be $54 billion, an increase of $15 billion over last year, according to a trade group. Airlines are preparing for the slower autumn season. This week, JetBlue and AirTran rolled out sales that run into late 2011, showing a need to fill seats. Henry Harteveldt, a travel-industry analyst for Forrester Research, said airlines could cut even more flights than currently planned, making it harder to find a cheap fare. Travellers say deals are already scarce, and that's causing them to rethink travel plans. Larry and Carla Brock of Pittsburgh said they paid $840 for one round-trip ticket on US Airways to Texas, where one of their sons was graduating from surgical residency at a Dallas hospital. A companion pass made the trip financially bearable. From / Gulf News