Consumers have the travel bug but airlines are struggling to increase profits.
Air travel demand worldwide rose more than 7 percent in August alone from a year earlier, and airlines worldwide carried a record 3.8 billion passengers last year, according to the International Air Transport Association industry group.
But analysts expect the largest U.S. airlines to post lower third-quarter profits, after carriers faced higher costs, hurricanes and competition during what is usually a busy quarter for travel.
Delta Air Lines, the second-largest U.S. carrier by traffic and the largest by market capitalization, will likely post earnings per share of $1.53, a decline of 10.1 percent, according to analysts polled by Thomson Reuters. Delta reports before the market opens on Wednesday. Analysts forecast Delta's quarterly revenue at $11.03 billion, a 5.2 percent increase over the July-September quarter of 2016.
The airline last week warned investors that Hurricane Irma cost it $120 million and trimmed its operating margin forecast to a range of 15.5 percent to 16.5 percent, from its estimate in July of a margin as high as 20 percent for the third quarter.
Delta's competitors are facing profit declines too, analysts said. Forecasts showed a 36 percent year-over-year decline to $1.99 a share for United Continental Holdings, which reports Oct. 18, while July-September profits at American Airlines will likely come in 24 percent lower than the year-earlier quarter at $1.34 a share, according to analysts. Estimates for domestic behemoth Southwest's earnings per share will likely drop 6.1 percent to 0.87 cents, analysts said.
Airline stocks surged on Tuesday after American Airlines slightly raised its estimate for a key revenue metric and United forecast better-than-expected revenue for the third quarter.
These are some of the topics airlines will likely address on earnings calls as investors question whether they can turn more travelers into bigger profits:
Labor and fuel
Fuel prices rose around 25 percent in the third quarter and costs spiked after Hurricane Harvey slammed into Houston in August, temporarily knocking out refinery operations. The cost of jet fuel, often airlines' second-biggest expense after labor, was about 20 percent more costly in the third quarter than in the year-earlier period, according to S&P Global Platts.
Investors will also look for updates on labor costs. American earlier this year announced mid-contract raises for pilots and flight attendants, and its stock plunged. Delta earlier this year announced a change to its profit-sharing regime that would pay all employees 10 percent of pretax income up to $2.5 billion and 20 percent above that amount.
Cabin segmentation and fare increases
Airlines have introduced new cabin classes as they face competition from low-cost airlines.
American and United this year followed Delta in offering basic economy, the offering formerly known as economy, but without perks like overhead bin access, the ability to select a seat and change your flight. American Airlines' president, Robert Isom, said in late September that half of travelers book the higher regular economy fare when considering no-frills basic economy.
Airlines are also rolling out premium economy class, which offers passengers more legroom and other perks like amenities kits and sometimes, better meals, in exchange for a higher fare.
Pay special attention to a key revenue metric known as the revenue per available seat mile, which measures how much money airlines make from every seat it flies a mile.
Raising fares is like walking a tightrope for airlines because if they fail to increase prices, investors may become impatient with low revenue growth, but carriers risk losing customers if they raise prices too much.
Storms
Powerful storms struck hubs of large U.S. airlines. Delta said it had to cancel 2,200 flights due to Hurricane Irma, while American called off more than 8,000 flights because of hurricanes Irma, Harvey and Maria.
Airlines will likely update investors on their outlook for demand for travel to the Caribbean in the coming peak travel season for the region, after successive, deadly storms caused billions of dollars in damage to islands including Puerto Rico and the Virgin Islands.
Trade and the 'America First' welcome mat
Airlines will likely provide some insight into demand in the international and domestic markets, and shed some light on demand not just of U.S. travelers but of visitors traveling to the U.S.
On trade, Delta was seeking a leg up on regional competitors when it inked a deal in April 2016 with Bombardier for 75 C-Series jets. A year-and-a-half later, Delta is caught in a trade war between the Canadian aircraft maker and Boeing. The U.S. Commerce Department most recently ruled the airline must pay a significant tariff, but the final International Trade Commission ruling will not come until February of next year.