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Air Travel Expected To Fall Over Labor Day

High prices, service cuts take toll on vacationers

August 19, 2008

The Air Transport Association of America forecasts that 16 million passengers will travel globally on U.S. airlines during the period, a decline of 5.7 percent from the 17 million passengers estimated to have traveled on U.S. airlines during the same period last year.

The projected decline consists of a 6.5 percent drop in domestic travel and a 1.0 percent increase in international travel. High energy prices across the economy, rising airfares and airline schedule cuts are the primary drivers of the overall reduction in passenger volumes expected for this period. Sustained triple-digit fuel costs not only have forced airlines to cut back service -- resulting in fewer seats available for domestic flights -- but they also have taken a toll on customers' spending power.

"We expect airplanes to be less full and skies to be less crowded this Labor Day holiday," said ATA President and CEO James C. May. "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."

Although there has been a recent and welcome drop in fuel prices so far this summer, jet fuel has averaged $160.47 per barrel, a 79 percent increase from the $89.82 price experienced in the prior-year period. Jet fuel remains the most costly of transportation fuels refined from crude oil, resulting in a disproportionate impact on the air transportation system, as airlines currently have no alternative to conventional kerosene-based jet fuel.

ATA said it urges Congress to act in a bipartisan fashion to craft a comprehensive, balanced national energy policy, saying recent declines are no cause for complacency. Since the end of 2007, 12 U.S. carriers have shut down or are attempting to reorganize in bankruptcy.

"On the customer service front, airlines have been taking every conceivable step to minimize delays and improve operational efficiencies. This focus has resulted in a decline in extended delays this year as compared to a year ago," said May. In June and July, according to U.S. Department of Transportation reports, just 27 out of every 100,000 domestic flights experienced taxi-out times exceeding three hours -- down substantially from the rate of 49 per 100,000 in June and July of 2007.

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