Airlines’ Challenge Is Cutting Costs, Not Filling Seats

Most customers buy tickets within a few months of when they hope to travel, so it’s difficult to forecast too far ahead. But Delta expects to collect as much as 5 percent more revenue from July through September than it did during the same period in 2019, the airline said, even though it expects capacity – the number of seats offered – to be down 15 to 17 percent.

Leisure travel is expected to follow seasonal patterns and slow down this fall, but Delta said it was optimistic that the decline would be offset by increased corporate and international travel, two profit centers that have lagged in the recovery.

American Airlines this week offered a preview of its own second-quarter results, saying it expected overall revenue to be up about 12 percent from the same quarter in 2019, though it said costs would be higher, too. Delta’s operating revenue in the quarter, $ 13.8 billion, was up about 10 percent from the same quarter in 2019. American and United Airlines are scheduled to report financial results next week, and Southwest Airlines later this month.

While strong demand has been a boon to the industry, its recent struggles have left consumers frustrated. Some relief may be coming, though: Air travel was among the few goods and services whose prices declined in June from the month before, the Bureau of Labor Statistics said on Wednesday.

After falling somewhat from a May peak, the average price for a domestic flight is $ 310, up about 16 percent from the same time in 2019, according to Hopper, a travel booking and price-tracking app. The average fare for an international flight is $ 827, up 26 percent from 2019.

Airlines may be limited in how much they can lower fares, too. The industry has benefited from higher ticket prices, but airlines are still far from collecting the profits they reported in 2019. Delta, for example, said its operating margin, a measure of profitability, was 11 percent in the second quarter of this year, down from 17 percent in the same period in 2019. For the third quarter, Delta expects to report an operating margin of 11 to 13 percent.

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