Economic turbulence shakes US airlines as travel demand falters

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Chicago/New York: US Airlines was flying high on a new golden age less than two months ago, as the strong demand for travel and tight industry’s widespread capacity increased the chances of increasing profits.

But the crackdown on President Donald Trump’s huge prices and government spending has raised this hope. Tourists and companies have reduced costs between growing economic uncertainty, and forced the carrier to reduce their first quarter profits forecast.

For many consumers and businesses, with the journey of a discretionary item, weak economic growth and the increasing inflation problems have also made the rest of the year a cloud.

The S&P 500 passenger airlines index is about 15 % lower this year and extensively reduces the S&P 500 index. Shares of Delta and United Airlines declined by about 20 % this year. Frontier Airlines is less than 2.0 % Discovery.

“Your first needs are food and shelter,” said David Neelman, CEO of low -cost career Brees Airways, and then, we are a little down on the cost list. ” “If you don’t have a job, you’re not going to buy airline tickets.”

With the reduction in demand, airlines have begun to eliminate flights to reduce fares and protect the margin. Frontier, Delta, United, American Airlines, Jet Blu and Electric all have trimmed the quarter of April to June in the past two weeks.

United’s CEO Scott Kirby has warned of widespread decline in the industry’s widespread capacity by the second half of August if demand does not return. To ensure, the booking for premium and long distance travel is maintained. The United States reported a jump of 8.0 % year -on -year in the Spring International Booking.

Some of the slowdowns of demand are also due to recent security events. Amanda Demanda Law Group data shows that aircraft safety concerns reached altitude all the time in February, with Google search “Are the aircraft now safe?” “Up to 900 percent.

The airlines are expected to remove the safety incidents soon. But they are less sure about economic pressure.

Warning signs

A survey of the conference board said Tuesday that US consumers’ confidence came to the lowest level in March for more than four years, the future expectations of income, business and labor market conditions are at the lowest level in 12 years.

The air tickets sold by US travel agencies fell 8.0 percent a month in February after a 39 percent increase in January. Both corporate and leisure visits were low, with airlines reporting corporation data shown last week.

According to data from the US Transportation Security Administration, the annual growth of passenger traffic in January decreased by 0.7 percent.

The weak demand is damaging the power to determine the pricing of the industry. According to US Labor Department data, rent in six months in February posted the first year of its first year. “You will face some kind of slowdown,” Frontier CEO Barry Buffal said in an interview.

Airlines are still supporting their entire year’s revenue estimates. But it can change if the demand is weak during the summer, usually the industry’s most profitable season.

Buffal said most of the workers depend on the market. “As long as the job is good, the leisure user will be fine,” he said.

Unemployment claims are still inch up. But inflation is making passengers more cautious.

Jacob Brown, a 24 -year -old teacher at Denver School, is avoiding hotels due to inflation and spending less during his visits due to inflation. Brown recently flew to Las Vegas but returned the Red Eye flight Denver to save the residence. “I’m just traveling when it’s at least.”