U.S. airlines pin hopes on summer vacation travel

CHICAGO (Reuters) - As business travel bookings plummet in the economic recession, U.S. airlines are looking hungrily at the summer vacation travel season for a bump in their leisure bookings.

That may be wishful thinking, however.

Carriers must fight the uphill battle of persuading people to fork over cash for vacations at a time when job losses mount and personal investments like homes and retirement plans shed value.

“Everybody is wondering if there’s another shoe to drop,” said Rick Seaney, chief executive of air fare research site

Seaney said that while there is no reliable way to gauge forward airline bookings, evidence suggests a gloomy outlook for leisure travel this year.

Travelers are booking trips closer to their departures, which indicates more shopping and less buying, he said.

Furthermore, airlines now offer deeply discounted tickets in hopes of luring thrifty passengers. The sales, which last much longer this year than last year, typically shave 25 percent to 50 percent off the high fares of last summer, Seaney said.

“These are not prices that we’re going to see outside of a recession,” Seaney said.

Discretionary travel spending is highly dependent on an economy that consumers can trust. And the U.S. economy offers very little good news these days.

The Labor Department on Friday said nonfarm payrolls shed 651,000 jobs in February, while the jobless rate climbed to 8.1 percent. Since the recession started in December 2007, the economy has shed 4.4 million jobs. More than half of those jobs were eliminated in the last four months.

Despite massive downsizing last year and in 2009, airlines still struggle to keep planes full and fares supported.

Monthly reports on airline operations released this week showed sharp declines in traffic as carriers slashed capacity. Most troubling for the airlines, however, was the shrinking load factors, which measure how full a plane is.

American Airlines, for example, said its load factor was 73.9 percent, down 2.9 percentage points from February 2008. Continental Airlines reported a load factor of 72.9 percent, a decline of 3.1 percentage points from a year ago.

Airline leaders link the shrinking load factors to a slowdown in business travel after politicians demonized lavish corporate trips in recent months.

Airline leaders like Doug Parker, chief executive at US Airways, hold out hope that leisure travel will not take the same hit.

“What we see ... right now is that the softness is mostly in business, as opposed to leisure,” Parker told Reuters on Tuesday. “You stimulate leisure somewhat with lower fares.”

Reporting by Kyle Peterson; editing by Richard Chang