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The new year looks bright for the airline industry, reports say

December 13, 2012|By Hugo Martin
  • Passengers wait in line at a security checkpoint at Los Angeles International Airport.
Passengers wait in line at a security checkpoint at Los Angeles International… (Mark Boster / Los Angeles…)

Airplanes will be packed during the holiday season, fuel costs should drop slightly next year while demand for airline seats will continue to grow.

Those are the predictions of two reports released Thursday, both of which paint a relatively sunny picture for the U.S. and the world's airline industry.

Does that mean a drop in airfares next year? Airline officials declined to answer that question but said the rise in airfares over the last decade has not kept up with inflation.

Nearly 42 million passengers will fly in the U.S. between Dec. 17, 2012 and Jan. 6, 2013, according to a report by Airlines for America, the trade group for the nation's airlines. That represents a 1% drop in passengers from the same three-week period a year ago.

But the slight drop in fliers comes at a time when the nation's airlines are reducing the number of available seats through mergers and consolidation.

In fact, planes are expected to be about 86% full -- slightly more packed than the same period last holiday season, said John Heimlich, chief economist for the trade group.

"We are expecting a smooth travel period," he said. "Carriers are confident about where their bookings stand relative to capacity."

The financial outlook should improve even more in 2013, according to a separate report by the Geneva-based International Air Transport Assn., the trade group for the world's largest airlines.

The international group revised its 2012 profit prediction for the world airlines from a $4.1-billion forecast made in October to $6.7 billion. The industry should collect profits of $8.7 billion in 2013, the group predicted.

The industry should benefit next year from continued consolidations and mergers, the elimination of lower-profit routes and higher capacity seating per plane, according to the trade group.

Fuel prices should drop slightly in 2013 while passenger demand will grow by 4.5% worldwide, the forecast said.

In North America, airlines should enjoy the biggest profit improvement, collecting a combined $3.4 billion in 2013, compared with $2.4 billion in 2012, the trade group said.


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Follow Hugo Martin on Twitter at @hugomartin

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