NO END IN SIGHT FOR SURGE, SAYS AIRLINE

Delta Air Lines expects travellers will pack planes during the upcoming holidays despite higher fares and growing concerns over inflation and the economy. Delta reported a third-quarter profit of US$695 million last as higher fares this summer and a lucrative credit-card business more than offset higher fuel prices.

The airline forecast a bigger-than-expected profit in the fourth quarter, with revenue that it expects will top pre-pandemic levels. Delta’s CEO said he sees no indication that anxiety over inflation and the economy will discourage people from travelling over the holidays.

“It’s going to be a very strong holiday season – Thanksgiving, Christmas, New Year’s,” CEO Ed Bastian said. “Consumers are still relatively healthy.”

Delta’s third-quarter numbers support that view. The airline’s operating revenue rose 11% above 2019 levels even with an 18% drop in passenger traffic. That was possible because flights were nearly 90% full and the average passenger paid 23% more per mile than during the same months of 2019. Revenue from premium seats rose sharply.

Bastian said advanced bookings – typically three or four months into the future – and comments from big corporate customers point to “very strong” travel demand through the fourth quarter and into early next year.

“I can’t speak for the broader economy,” he said on a call with analysts and reporters. “I know there is some pretty significant macro shifts going on in spending – out of goods and into services – which we are a beneficiary of … we’re glad to see people back on the road.”

Summer got off to a rocky start for US airlines, as 2,400 flights were cancelled and one in five flights was delayed over the extended July 4 holiday weekend. Despite threats from Transportation Secretary Pete Buttigieg, airlines didn’t do much better until September, when kids were back in school and the number of vacation travellers subsided.

Delta and other airlines have trimmed schedules and hired more workers to fix an understaffing problem that caused many of the flight cancellations. Bastian said Delta is prepared for the holiday season.

Delta still expects to operate fewer flights than in 2019 but plans to fully restore its network by next summer.