Airlines for America releases its annual Winter Holiday Air Travel Forecast projecting that 44.3 million travelers will fly during the 21-day period from December 16, 2013-January 5, 2014. This is a two percent increase from 2013, or roughly 41,000 passengers daily. In addition, U.S. airlines' improving financials are enabling significant reinvestment in the travel experience for the flying public.

1. 2013-2014 Winter Holiday Travel Forecast
for U.S. Airlines
John P. Heimlich
Vice President & Chief Economist
December 12, 2013

2. Overview
» Presentation of winter-holiday air travel forecast and key drivers of demand
» Review of rising premium of jet fuel relative to gasoline and continued price volatility
» Assessment of recent airline operational performance
» Analysis of capital expenditures; preview of near-term product/customer investment
» Measurement of TSA aviation-security productivity and USG call for additional taxes
» Recap
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3. A4A Projects U.S. Airlines to Carry 44.3M Winter-Holiday Passengers in 2013-2014
Up 41,000 Passengers per Day, or 2 Percent, from Prior Year
2012-2013
2013-2014
21-Day Forecast Period
Dec. 17-Jan. 6
Dec. 16-Jan. 5
Passengers: Total (Millions)
43.4 estimated
44.3 projected
Passengers: Daily (Millions)
1.71 to 2.26 estimated
1.74 to 2.31 projected
Busiest Days (in order)
12/21, 12/27, 12/20, 12/28
12/20, 12/27, 12/26, 1/3
Lightest Days (in order)
12/25, 12/24, 12/31, 1/5
12/25, 12/24, 12/31, 1/1
Load Factor (Seats Occupied)
~80 to ~90 percent varying by day
Source: A4A, selected sample carriers and DOT T100 segment data
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4. Key Travel Forecast Drivers Trending Positively
U.S. Economy (% CAGR) Expanding
U.S. Job Growth (000) Accelerating
4.0
210
3.0
200
2.0
190
1.0
180
0.0
170
1Q13
2Q13
3Q13
Sep-13
Personal Incomes ($000) Rising
Oct-13
Nov-13
Household Net Worth ($T) Growing
$37.0
$78
$36.8
$77
$36.6
$76
$36.4
$75
$36.2
$74
$36.0
$73
1Q13
2Q13
1Q13
3Q13
2Q13
3Q13
Sources: BEA, BLS and Federal Reserve; U.S. GDP real annual average growth rate (%), U.S. nonfarm payroll employment growth (month-over-month, seasonally adjusted),
U.S. disposable personal income per capita (chained 2009 dollars, seasonally adjusted annual rates); U.S. household net worth in current dollars, not seasonally adjusted
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5. U.S. Jet-Fuel Prices Have Reached Their Highest Level in Three Months
Jet Fuel Has Averaged 38¢ More Than Gasoline over Past 14 Weeks, Peaking at 47¢
Jet Fuel vs. Motor Gasoline
Weekly Average Price per Gallon
Jet Fuel Price Volatility
Daily Average Price per Gallon
$3.25
$3.15
$3.10
$3.05
$3.00
$2.95
$2.90
$2.85
$2.80
$2.75
$2.70
27-Dec-13
13-Dec-13
29-Nov-13
15-Nov-13
1-Nov-13
18-Oct-13
4-Oct-13
-22¢
20-Sep-13
3-Jan-14
13-Dec-13
22-Nov-13
1-Nov-13
11-Oct-13
20-Sep-13
30-Aug-13
9-Aug-13
19-Jul-13
28-Jun-13
$2.25
+23¢
6-Sep-13
$2.45
-36¢
23-Aug-13
$2.65
+17¢
9-Aug-13
+47¢
$2.85
+39¢
26-Jul-13
$3.05
12-Jul-13
Jet
28-Jun-13
Gasoline
Source: A4A and Energy Information Administration (U.S. Gulf Coast spot prices)
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6. Fall Operations Remain Strong, with U.S. Airlines Completing More Than 99 Percent
of Scheduled Flights and Arriving On Time at a Rate of 84 Percent
DOT: “October Airline Service Improved from Previous Year in all Major Categories”
Flight Completion Rate (%)
On-Time Arrival Rate (%)
2012
2013
2012
2013
September
99.2
99.1
83.3
83.8
October
97.2
99.4
80.2
84.1
November
99.0
TBD
85.7
TBD
December
98.4
TBD
76.6
TBD
Sources: DOT Air Travel Consumer Report (http://www.dot.gov/airconsumer/air-travel-consumer-reports) and masFlight
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7. Bag-Handling Performance Continues to Improve Despite Rising Rate of Checked
Bags; Complaints Lowest in Four Years – Less Than 0.9 for Every 100,000 Customers
DOT: “October Airline Service Improved from Previous Year in all Major Categories”
October Checked Bags
per Customer1
October Mishandled Bags
per 1,000 Customers2
0.7
4.0
0.6
3.5
1.2
1.0
3.0
0.5
2.52
2.5
0.4
2.0
0.3
0.4
0.2
0.5
0.0
0.0
2010
2
0.8
1.0
0.1
1
0.84
0.6
1.5
0.2
October Complaints per
100,000 Customers2
2011
2012 2013
0.0
2010
2011
Number of persons screened at U.S. airport checkpoints
Number of passengers enplaned on U.S. airlines in domestic service
2012 2013
2010
2011
2012 2013
Sources: TSA and DOT Air Travel Consumer Report
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8. Improving Finances Enabling Significant Reinvestment in Customer Experience
Airline CapEx Up 125% Since 2010, with Plans to Invest ~$32B over Next Three Years
U.S. Airline* Capital Expenditures ($ Millions)
Planned CapEx for 2014-2016: ~$32 Billion
$11,584
» Aircraft, engines, winglets, spare parts
$9,771
» Ground equipment, loading bridges
» Airport facilities, aircraft hangars
$6,613
» Premium seats, new aircraft interiors
$5,156
» Maintenance facilities and machinery
» Bag carousels, carts, scanners
» In-flight entertainment and Wi-Fi
» Computers, kiosks, mobile technology
2010
2011
2012
2013E
* SEC filings of Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit, United and US Airways
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9. USG Seeking ~$800M/Year Security Tax Increase from Airlines/Travelers Even
Though TSA Has Been Expending More Resources to Process Decreasing Workload
% Change from FY2007 to FY2013
Transportation Security Administration Productivity
19.1
TSA Budget per
Customer*
13.5
TSA FTEs per
Million Customers*
FY2007
$9.31
68.8
FY2013
$12.48
87.9
Change
+$3.17 (34%)
+19.1 (28%)
(11.2)
Budget
Staffing
Customers*
Sources: A4A analysis of data from the TSA and the Office of Management and Budget
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* A person screened by TSA at an airport checkpoint
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10. Recap
» Systemwide air travel on U.S. airlines during Winter 2013-2014 holiday period projected
to rise 2 percent from prior year, or 41,000 passengers per day; airlines are deploying
more seats by using larger aircraft to accommodate the increase in demand
» Jet-fuel prices remain high and volatile and are commanding a premium to gasoline
» Airline operational performance is strong, boasting a completion factor exceeding 99
percent and an on-time arrival rate of 84 percent in recent months (per DOT), October
best bag-handling performance of any month ever recorded, complaints falling
» Delivering consistent (albeit slim) earnings has enabled airlines to increase capital
expenditures by more than double over the past three years, with plans to reinvest an
additional $32 billion over the next three years
» This week’s bipartisan budget bill includes a tax increase on airlines/travelers (effective
July 1, 2014) to support TSA even though the agency has been expending everincreasing financial and human resources to process a decreasing aviation workload
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11. www.airlines.org
StopAirTaxNow.com