During Q1 earnings season, U.S. airlines essentially said don’t worry, demand and pricing trends would be better in Q2. They were right.
The first three months of 2019 weren’t bad for U.S. carriers. All were solidly profitable. But remember the talk about “choppy” leisure demand, the Federal government shutdown, weak economy-class yields on transatlantic routes, price wars on transcon routes, overcapacity on west-coast routes, a battle for Hawaii, and “aggressive pricing” on domestic connecting itineraries? Would the choppiness get worse after Easter?
As airlines assured, it didn’t. On the contrary, pricing trends firmed, and demand conditions steadily strengthened as the second quarter progressed. Of America’s nine publicly-traded airlines (excluding regionals) only one—Hawaiian—hasn’t yet reported. What’s already clear from United and Alaska, though, is that the Hawaii market remains challenging from a yield perspective. Alaska also cited troubles in its wintry namesake state. American said Argentina is still a drag. It joined JetBlue in fingering weakness on Dominican Republic routes. More consequential was the weakness United and American witnessed on China routes, and in demand from overseas points-of-sale more generally. Like Delta, they also saw plummeting cargo revenues.
But these isolated weak spots were the exceptions. Transcon markets, a major headache for Alaska and JetBlue in Q1, performed much better in Q2. Same for the Brazilian market. Mexico was strong last quarter too. Ditto the Caribbean ex Dominican routes, according to American. JetBlue had happy things to say about the northeast-to-Florida market. That positivity seemed to characterize Florida more broadly, the bread-and-butter market for Allegiant and Spirit (notwithstanding some setbacks Spirit had with international routes from Orlando). Notwithstanding some setbacks in japan for Delta, Tokyo performed well for United and American (and perhaps Hawaiian too—we’ll learn more this week).
To continue reading, become a Skift Airline Weekly subscriber today.