US airlines are taking a cautious approach in growing their businesses this year amid improving finances from lower fuel bills and higher air traffic flows. Capacity gains could reinvigorate the country’s relatively muted demand growth, which climbed by 2.3% to 1.47 million barrels per day in 2014, according to the Energy Information Administration (EIA). After four years of oil prices in the $100 per barrel range, efforts to fine-tune capacity to passenger flows are now hardwired into airline operations. Widespread consolidation in recent years and fuel efficiency gains have curbed growth in US jet fuel demand, which started to recover in 2012 after touching bottom in 2009 during the economic recession. Airlines for America (A4A) projects that spring passenger travel volumes will rise by 2% to their highest level in seven years. At a media briefing last week, A4A Chief Economist John Heimlich said that airlines are deploying new and larger aircraft on many routes to meet the extra travel demand. Over the course of 2015, airlines are likely to add 90,000 seats per day for domestic travel - the most since the 2008 recession - while international seats should rise by 20,000/d to their highest-ever level. Last year international travelers to and from the US climbed by 6.5% to 197.3 million, with flight corridors to Europe and Canada representing the two largest destinations. Strengthening of the dollar versus the euro should encourage more US passenger travel to Europe this year.
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