- A record 16.5 million people are expected to fly on U.S. airlines worldwide over the Labor Day holiday between Aug. 29 and Sept. 3, according to Airlines for America, an industry trade group.
- The forecast comes as airline stocks enjoy a summer surge.
- Factors helping carriers include strong close-in bookings and higher-priced business fare tickets for those flying in the next 10 days.
A late-summer surge in travel and projected record number of passengers flying around Labor Day are boosting U.S. airlines and their stocks.
Airlines for America, an industry trade group, forecast a record 16.5 million people will fly on U.S. airlines worldwide between Wednesday, Aug. 29 and Tuesday, Sept. 3.
The potential for packed planes doesn't surprise Airlines for America Vice President and Chief Economist John Heimlich.
"2018 has been an exceptionally busy year for air travel, with 20 out of the 25 busiest days ever recorded by the Transportation Security Administration occurring so far this year," Heimlich said in a statement.
The forecast comes as airline stocks enjoy a summer surge. In the last month, Spirit Airlines has risen 10.6 percent, Delta shares have gained 9.4 percent and United Continental has climbed 8.1 percent.
Analysts believe there are a number of factors helping carriers, including strong close-in bookings, which counts higher-priced business fare tickets for those flying in the next 10 days.
"What we've been seeing over the last couple of weeks is a strengthening of business fares," said Susan Donofrio, airline analyst for Macquarie. "We do a weekly fare tracker and business fares are up about eight percent year over year." Macquarie's survey of 15 routes around the country shows the average one-way business fare is currently $257.
Donofrio said another indication that airlines are seeing strong demand is the recent decision from Southwest and JetBlue to raise some ancillary fees. For example, Southwest's EarlyBird Check-In boarding fee has increased from $15 each way to $20 or $25 depending on the length of the route and the popularity of early boarding on those flights. Meanwhile, JetBlue has raised the price for checking a bag from $25 to $30 for those who buy the carrier's lowest price fares.
"Certainly, they wouldn't be doing it if there wasn't strength in demand that they are comforted by," said Donofrio.
All of that comes as the price of jet fuel, the biggest airline expense other than labor, has moderated over the last couple of months. That has many investors believing airlines fuel costs will stay in check for the foreseeable future.