A dissection of the first wave of financial results from U.S. airlines for the Thanksgiving travel period shows these carriers had a successful lead-in to the start of the holiday season.
According to analysts at Morgan Stanley, the all-important gauge of “passenger revenue per available seat mile” or PRASM – for low-cost carriers – beat their expectations, and revenues overall were up, which is no surprise to anyone who bought a high-priced Thanksgiving airline tickets.
High Prices Don’t Keep Consumers from Flying
Airlines also benefited from continued capacity cutting. The number of available seats during this travel period was down, and expectations are that passengers will continue to see fewer empty seats on planes as we head into 2012 – a situation intensified by the recent American Airlines bankruptcy.
Perhaps most significantly, demand for travel defies the daily, negative economic headlines. Despite lingering financial concerns, people still want to travel, and they do – or at least they did during the recent holiday season, despite the high prices and despite a record number of airfare hike attempts during 2011.
Price of Oil Remains Big Concern
One concern may cloud the picture for the airlines, and that is the high price of oil, currently in the low $100s (per barrel – and add $10 more per barrel in Europe). This could force airlines to raise prices even higher, and at some point consumers will say, “enough” and refuse to fly.