Labor Day air travel seen falling: trade group

CHICAGO (Reuters) - The number of passengers on U.S. airlines during the Labor Day holiday will likely decline this year as the recession erodes budgets, but planes will be full and fares are inching higher, experts said on Monday.

The Labor Day travel forecast from the Air Transport Association (ATA), an industry trade group, said about 3.5 percent fewer travelers are expected to fly during the eight-day Labor Day holiday period.

But major capacity cuts in the last year mean planes will be full as fewer seats are being flown.

"Economic uncertainty and persistently high energy prices for consumers and businesses continue to impact demand for air travel," ATA Chief Executive James May said in a statement.

The airline industry has been battered this year by declining demand amid the economic recession. Carriers, however, have been rapidly downsizing since last year, so planes have remained full even as ridership falls.

The ATA said the projected decline is for a 3.5 percent drop in domestic travel and a 3 percent drop in international travel.

Despite the declining demand, Rick Seaney, chief executive of FareCompare.com, sees some recovery in ticket prices -- still down from a year ago -- as the peak summer travel season ends.

"I think they're definitely firming," Seaney said.

Earlier this year, Seaney noted longer and deeper fare sales as airline sought to fill planes during the summer. Sales are less aggressive now, but he said airlines still are taking every stop possible to make sure demand does not slip after summer.

Seaney said an ongoing fare sale by JetBlue Airways Corp that allows unlimited travel for $599 for one month is a prime example.

"I think you'll see a lot more of those marketing schemes to try to make sure that September doesn't end up being a disaster," he said.

(Reporting by Kyle Peterson, editing by Gerald E. McCormick)