Airport Experience® News - ACDBE & Small Business Issue 2024

AIRLINES

AIRLINES IN FLUX Will The Near Future Bring A Shakeout In Economy Travel?

BY CAROL WARD

January 2024 Passenger Enplanements, Domestic & International

February 2024 Passenger Enplanements, Domestic & International

March 2024 Passenger Enplanements, Domestic & International

81.4 Million*

-1.0% from previous month*

82.4 Million*

1.3% from previous month*

81.2 Million*

-1.3% from previous month*

4.5% from Jan. 2019 (pre-pandemic)

10.7% from Dec. 2019 (pre-pandemic)

5.8% from Mar.. 2019 (pre-pandemic)

4.0% from same month previous year

8.6% from same month previous year

6.3% from same month previous year

* Seasonally Adjusted. Source: U.S. Department of Transportation’s Bureau of Transportation Statistics

n the surface, air travel in North America is healthy. Major airlines are profitable, demand is growing

that higher fuel and labor costs, as well as maintenance expenses and general inflationary pressures are weighing down what would otherwise be a more robust earnings forecast. William Swelbar, chief industry analyst for the Swelbar-Zhong Consultancy , says two of the three have separated themselves from the pack, offering a premium product and focusing on growth in business and international traffic. “United and Delta are very, very clear as to who they are and what they want to be, and who they want to appeal to,” he says. American Airlines, which focused heavily on leisure travelers coming out of the pandemic is, in Swelbar’s opinion, having a bit of “an identity crisis,” not clearly embracing the business and international sector but also not diving full force into the competitive leisure segment. “I would say I kind of [categorize] American more with Alaska Airlines and JetBlue ,” he says. “I don’t think American knows who it is today.”

O

and carriers are adding capacity to meet the growing demand. But, as is usually the case in the airline industry, problems are bubbling to the surface. Currently, it’s the nation’s three legacy carriers – United Airlines , Delta Air Lines and American Airlines – that are inspiring confidence. “The legacy carriers are performing well and the expectation is that they will grow their revenues this year,” says Jarrett Bilous, airlines managing director, S&P Global Ratings . “The big reason for that is there has been relatively modest increases in capacity and relatively flat fares from last year. I think overall demand remains strong. “There are some pockets of overcapacity in certain markets, but I think in general, the legacy carriers should be expected to perform relatively well this year, likely similar to last year, if not slightly lighter on an earnings perspective,” he adds, noting

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AX NEWS JULY/AUGUST 2024