Delta, US Airways see strong travel demand

Associated Press Modified: April 25, 2012 at 5:00 pm •  Published: April 25, 2012

MINNEAPOLIS (AP) — Rising fares haven't kept passengers away, judging by financial results at Delta Air Lines and US Airways.

Both airlines reported quarterly profits on Wednesday. And both said travel demand appears to be holding up, suggesting that planes will be full and fares will be higher for the busy summer travel season.

Delta, the nation's second-biggest airline, said it will reduce flying as much as 3 percent during the quarter that ends in June. The idea is that travelers will pay more for the remaining seats. So far, that appears to be working.

Delta earned $124 million for the most recent quarter and US Airways earned $48 million. Both airlines lost money a year ago, and both benefited from special items for their quarterly profit this year.

Delta President Ed Bastian said per-mile yields are rising for April and May, and that Delta expects a "solidly profitable" second quarter, too.

Airlines have had three broad-based fare increases so far this year, according to a tally by JPMorgan analyst Jamie Baker. Another one last week appears to have failed.

However, fare sales are fewer, said US Airways President Scott Kirby. And some airlines are restoring one-week advance purchase requirements on cheaper fares that had sometimes been available on the day of the flight, he said.

Kirby said strong leisure demand shows that the higher prices haven't kept passengers on the ground.

"I don't think by any stretch of the imagination the consumer is getting priced out of air travel," he said.

We may not be there yet, but there is a point where people start to stay home because of high fares, said Rick Seaney, CEO of FareCompare.com.

"Consumers will prevent prices from going outlandishly high because they'll stop booking," he said. "Airlines, in the new world order of $100 a barrel oil, have to fill up their planes to the gills" with passengers in order to make money, he said.

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