November 1, 2010 / 5:30 PM / 8 years ago

Travel demand, fares seen up for Thanksgiving

CHICAGO (Reuters) - The Thanksgiving holiday will see more airline passengers, higher fares and packed planes this year as a stronger economy stokes travel demand.

An airplane departs Sky Harbor International Airport in Phoenix in this November 25, 2009 file photo. REUTERS/Joshua Lott

The number of travelers is seen up 3.5 percent compared with a year ago, according to the Air Transport Association (ATA), an airline industry trade group.

“While modest, the recovery is particularly encouraging given the deep hole that this industry was in a year ago,” ATA president James May said in a statement on Monday.

About 24 million air travelers are expected over a 12-day period surrounding the November 25 holiday, with daily passenger volumes ranging from 1.3 million to 2.5 million, the ATA said. Load factors, which measure how full airplanes are, are expected to be near 90 percent, the ATA said.

The airline industry is struggling to regain stability in 2010 after the economic downturn in 2008 and 2009 eroded travel demand and forced airlines to cut capacity to prop up fares.

Carriers also bolstered revenue by collecting new fees for travel goods and services like checked luggage.

The six largest U.S. airlines earned $1.6 billion in the third quarter, reversing losses amounting to nearly $600 million a year ago.

The higher traffic bolstered Thanksgiving air fares, which in many cities are trending 17 to 18 percent higher than 2009, Rick Seaney, chief executive of FareCompare, said on his website.

Morningstar equity analyst Basili Alukos linked the higher fares to reductions in seating capacity on domestic routes. Capacity on those routes is down about 10 percent from 2008.

“Prices have gone up ... it seems pretty substantially compared to last year,” Alukos said. “It’s just a reflection of lower supply.”

Airline stocks were broadly lower on Monday with the Arca airline index down 0.93 percent.

Shares of United Continental Holdings, parent of United Airlines, were down 2.5 percent at $28.32, and Delta Air Lines shares were down 1.2 percent at $13.72 on the New York Stock Exchange.

Reporting by Kyle Peterson; editing by Gunna Dickson

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