Airline group predicts US holiday air travel down 9%

11 December 2008 23:50  [Source: ICIS news]

HOUSTON (ICIS news)--The Air Transport Association (ATA) on Thursday predicted a 9% drop in US airline travel during the upcoming holiday season while jet fuel prices continued to slide.

"The decline is driven primarily by an extremely fragile economy and falling global demand for travel," said ATA president and CEO James May.

ATA expects US carriers to see approximately 2m passengers/day during the holiday period from 18 December through 7 January, with the busiest days projected to be between 19 December and 27 December.

The New York Harbor (NYH) price for US jet kerosene was assessed at $1.4025-1.4050/gal as of 10 December, according to data from global chemical market intelligence service ICIS pricing, a drop of 12 cents in three days compared with $1.5225-1.5250/gal on 8 December.

NYH jet fuel hit a 2008 peak of $4.35/gal (€3.35/gal) in July.

Earlier in the week, experts said that correlation between seasonal travel and jet fuel prices is weak, but the commodity's price and demand continued to plunge.

US jet fuel demand fell to 1.270m bbl/day in the week ended 5 December, compared with 1.327m bbl/day a week earlier and peaked at 1.731m bbl/day in July, according to the Energy Information Administration (EIA).

The US Bureau of Transportation Statistics (BTS) ushered in more dismal news for the airline industry when it reported on Thursday that air travel on US carriers slid by 8.4% in September compared with the same month in 2007.

The decline was the steepest monthly fall since August, 2002.

The September drop also marked the seventh consecutive monthly decrease in US air travel.  

After nine months of reporting, 12.3m fewer passengers flew on US airlines in 2008 compared with the same time period in a year earlier, the BTS said.

John Heimlich, ATA's vice president and chief economist, said that 2009's outlook won't provide any relief to the ailing US industry.

"All signs suggest that the schedule cuts prompted by high fuel prices in 2008 will deepen in 2009, primarily due to the rapidly deteriorating economic environment and the volatility of the industry's cost of operations," he said.

($1 = €0.77)

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By: Ryan Hickman
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