“If you don’t cater to premium, if you can’t bank on loyalty and if you don’t fly internationally, this year’s third quarter is likely to disappoint,” said Jamie Baker, a JPMorgan Chase analyst.
GLOAccording to a recent report by Bloomberg News, travelers are displaying a strong desire to take international trips following the relaxation of COVID-19 restrictions. This trend has caught the airline industry somewhat off guard, leading to domestic airlines reducing prices and experiencing financial strain. Carriers like JetBlue and Southwest have adjusted their outlooks for the year due to the pressure they are facing.
Jamie Baker, an analyst at JPMorgan Chase, noted that airlines that don’t cater to premium travelers, lack strong loyalty programs, or don’t operate internationally may face disappointment in the third quarter of this year.
The unexpected surge in international travel has resulted in U.S. round-trip rates dropping by about 11% compared to the previous year. This decline is expected to persist until the winter holidays. However, industry executives remain cautious about predicting an immediate rebound in sales after the summer travel season.
Frontier Airlines CEO Barry Biffle mentioned that they anticipate demand to continue into the fall, and the airline hasn’t assumed a rapid change in the travel environment until the heart of winter.
While this rise in international travel has negatively affected domestic airlines, hotel chains like Marriott have experienced positive effects. Marriott reported a significant increase in revenue per available room (RevPAR), signaling a recovery in global leisure and business travel, especially from markets like China.
PYMNTS research has indicated that despite high inflation, many consumers are unwilling to give up on travel. Travel remains an essential aspect of consumer behavior, even amid economic challenges.
