By Rajesh Kumar Singh, Doyinsola Oladipo and Joanna Plucinska
(Reuters) - New Yorker Elizabeth Palumbi's list of European cities to visit this spring keeps getting longer, and she is not alone.
Online searches by Americans for flights to Europe trips are surging despite soaring air fares, a worsening economic outlook and risks of gridlock at some of the airports in Europe.
The travel boom is promising record profit margins at some U.S. carriers, which are ramping up transatlantic capacity to cash in on Americans' thirst for travel to Europe.
It also explains why U.S. carriers remain upbeat about travel spending in spite of rising interest rates, high inflation, mounting job losses and a global banking crisis.
Industry executives said lifting of pandemic-related travel restrictions in Europe is encouraging more people to travel as they no longer fear getting stranded overseas if they contract the virus. Travelers (NYSE:TRV) are also being emboldened by a strong U.S. dollar and more flexible work arrangements.
Palumbi, a 26-year-old meteorologist, intends to work remotely and travel to Portugal, Southern France, and Montenegro.
"It's been impossible to open up social media over the past couple of years without seeing at least a few friends posting from Europe," she said.
Online travel agency Hopper's March data shows 37% of searches from U.S.-based customers for international travel this spring are for flights to Europe, a 9% increase from the same period in 2019.
Travel website Kayak said searches for travel to Europe this summer are up 77% from last year.
There is still untapped travel demand for Europe even after a busy summer last year, said Hayley Berg, lead economist at Hopper. As a result, from late May through fall, the region has become the top travel destination for Americans.
It's a boost for Europe's travel industry, which is grappling with cash-strapped domestic travelers looking for cheaper vacations and lower-than-expected bookings from high-spending Chinese travelers.
Transatlantic travel is the industry's most lucrative long-haul market, accounting for between 11% and 20% of passenger revenue last year at the big three U.S. carriers: American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL) and United Airlines.
However, widespread labor strife in Europe, along with a passenger cap at Amsterdam's Schiphol Airport, did not let carriers fully capitalize on travel demand last summer. The resulting flight cancellations and reductions in service, particularly in Amsterdam, hurt Delta's earnings.
Schiphol, one of Europe's busiest airports, has plans to limit passenger numbers again this summer.
Both Delta and United have said they expect record profit margins this summer from the transatlantic market, without offering more details.
The three big U.S. carriers have increased transatlantic capacity by 22% this year, according to aviation analytics company Cirium.
Some European carriers like Norse Atlantic are also trying to cash in. The Norway-based airline has plans to add Los Angeles, San Francisco, Washington and Boston to its summer schedule from London Gatwick airport.
Average fare for a round-trip flight to Europe, meanwhile, has risen 31% from last year, Hopper data shows.
Palumbi has used airline miles and travel credit card points to book her flights. But if she decides to change her return flight, it could cost her up to $1,000, she said.
U.S. airline executives warn prices are only going higher.
"I would urge you to tell all your neighbors if they're trying to go to Rome this summer, they better book early," United Chief Commercial Cfficer Andrew Nocella said.