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Airlines worry about fall as they enjoy the summer

DALLAS — This promises to be a moneymaking summer for the airlines, with planes full of passengers paying higher fares than a year ago. But there could be a fall chill in the air.

Leisure travelers say they're cutting back on travel because of high-priced tickets, concerns 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 Labor Day," said 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 percent. 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.

Southwest boosted its May traffic 10.9 percent over a year ago. JetBlue increased traffic 10.6 percent, 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 said revenue per seat jumped 14 to 15 percent from a year ago, and that doesn't even include money from extra fees. The same measure was up 11 to 12 percent at Southwest Airlines and a stunning 19 percent at JetBlue.

The average flight in May was more than 83 percent full, an occupancy level unheard of a few years ago. And it could go higher through August.

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 fall travel season. This week, JetBlue and AirTran rolled out sales that run into late 2011, indicating a need to fill seats.

Henry Harteveldt, a travel industry analyst for Forrester Research, said airlines could cut even more flights, making it harder to find a cheap fare. Travelers say deals are already scarce, and that's causing them to rethink travel plans.

Airlines worry about fall as they enjoy the summer 06/15/11 [Last modified: Wednesday, June 15, 2011 9:03pm]
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