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Small upswing in Thanksgiving air travel predicted

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By Victoria Stilwell
Bloomberg News
U.S. airlines grappling with higher fuel and labor expenses may get a boost from Thanksgiving holiday travel, with a trade group predicting last year's stagnation will give way to slight growth.
About 23.7 million passengers will fly from Nov. 16 through Nov. 27, according to Airlines for America, whose members include the largest U.S. carriers, United Continental Holdings, AMR's American Airlines and Delta Air Lines. That's up from 23.6 million last year, the same as in 2010, the organization said.
"It's a good indication that we do see a slight increase here year over year," John Heimlich, chief economist for Airlines for America, said in a conference call. "Even half a percent growth, we'll take it in the right direction."
The forecast is a bright spot for U.S. airlines grappling with profit margins weakened by 6.2 percent growth in costs, including fuel as well as wages and benefits, in the first nine months of 2012.
The number of passengers would still be about 9.5 percent below peak travel years in 2006 and 2007, according to the group's data. For the 2011 Thanksgiving holiday period, Airlines for America had predicted a 2 percent year-to-year drop, worse than what airlines actually experienced.
The busiest travel days this year will be Nov. 25 followed by Nov. 21 and Nov. 26, when planes are expected to be almost 90 percent full, the group said.
"It's pent-up demand," Michael Derchin, an analyst with CRT Capital Group LLC in Stamford, Conn., said in a telephone interview. "On the margin things are slightly better this year than they were last year, but we're talking about very small degrees here."
Forecasted growth this year reflects perceptions that the economy is slowing improving, Jean Medina, an Airlines for America spokeswoman, said by telephone. Consumer confidence in October rose to its highest level since February 2008, data from the Conference Board showed earlier this month, as gasoline prices fell and the housing market slowly recovered.
The projected improvement in Thanksgiving travel should occur even in the aftermath of superstorm Sandy, which lashed the northeastern U.S. and forced about 20,000 cancellations last week, Heimlich said.
AAA, the nation's biggest motoring organization, will release its forecast on Thanksgiving-related U.S. travel next week, Michael Green, a spokesman, said by telephone.



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