Monday, August 18, 2008

Airlines Predict Drop in Passengers for Labor Day Weekend

Major U.S. airlines will see a 6 percent drop in passengers during the eight-day Labor Day holiday period as high oil prices continue to roil the industry, the airlines' trade organization predicted on Monday.

The Air Transport Association of America (ATA) said that although fuel prices have declined in recent weeks, jet fuel has averaged $160.47 a barrel this summer, 79 percent higher than last summer's price.

Crude oil has retreated from a record high above $147 a barrel on July 11 to around $114 on Monday, but that compares to roughly $72 this time last year and is still far too high for the struggling U.S. airline industry.

To survive, airlines have been making big cuts in routes, staff and capacity, as well as raising fares and introducing fees for checked bags and other services.

"High energy prices across the economy, rising air fares and airline schedule cuts are the primary drivers of the overall reduction in passenger volumes expected for this (Labor Day) period," the ATA said in a statement.

The ATA forecast that 16 million passengers will travel globally on U.S. airlines from August 27 through September 3 -- a decline of 5.7 percent from the same period last year.

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