Issue No. 865
Summertime, and the Fares Are Easy
High Demand + Less Capacity = Higher Revenues. Or so Airlines Hope
Pushing Back: Inside the Issue
Delta Air Lines became the latest in a long list of U.S. carriers to cut summer capacity. Now, almost all the U.S. majors and mid-tier airlines have cited some combination of staffing, air traffic control issues, weather, and aircraft availability for the schedule cuts, which are aimed to ensure operational reliability. But there is a big silver lining. With demand expected to be through the roof this summer after two years of the pandemic, airlines stand to reap significant revenues. Fares will be higher, but so will yields, even on domestic leisure routes.
Half a world away, IndiGo is optimistic about India's airline market and also reports that summer demand is strong. But IndiGo has a slightly different problem ahead of it. The carrier so far has been passing higher fuel costs on to passengers, but CEO Ronojoy Dutta predicts the market will reach a point soon where higher costs will dampen demand. He said the Indian airline industry is engaging in a "balancing act" now, one that carriers around the world could soon find themselves in if fuel costs continue to rise. Meanwhile, JetBlue was among the first U.S. airlines to hint that it could start its own balancing act this autumn, if inflation and oil prices keep growing and tip the U.S. into recession. But for now, on the cusp of summer, the fares are easy.
The Airline Weekly Lounge Podcast
Just how bullish is IndiGo CEO Ronojoy Dutta on India’s airline market? Very, very bullish. But Edward “Ned” Russell and Madhu Unnikrishnan note in this week's episode that others have predicted that India’s aviation market is about to take off (Kingfisher? Jet Airways?). So what makes Dutta so confident? Listen to this week’s episode to find out. A full archive of the 'Lounge is here.