The demand for air travel continues to surge, with U.S. carriers expected to transport a record 28.5 million passengers during the Thanksgiving holiday, a 3% increase from the previous year.
Despite the continued growth in passengers, the nation’s airlines are starting to report a drop in profits.
Industry trade group Airlines for America predicted the increase in passengers for the Thanksgiving period, from Nov. 17 to Nov. 28. The same group said rising expenses — in particular an 8.1% increase in labor costs and 17% rise in fuel costs — are cutting into profit margins.
During the first nine months of the year, the nine biggest carriers reported a pre-tax profit of $14.7 billion, which is a margin of 12%. That’s down from $18.4 billion, or a margin of 15.5%, in the same period last year, the group reported.
Still, John Heimlich, the chief economist for the group, predicted that travelers should continue to enjoy low fares thanks to “the highly competitive air-service landscape.”