Airlines are scrambling to fix the unsustainable crisis caused by too many cheap flights

[Pelican Press 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

Airlines are scrambling to fix the unsustainable crisis caused by too many cheap flights

An influx of cheap economy-class seats hitting that market in recent months has depressed airfares.

This has weighed down airline earnings despite strong demand for flights.

Airlines are cutting seat capacity and leaning on premium cabins to improve financial performance.

It may not feel like it, but there are a lot of cheap flights to be had this summer — and the influx of low-priced, often money-losing economy seats has airlines scrambling.

“The unprofitable capacity is just not sustainable,”

This is the hidden content, please

• Sign In
• or
• Sign Up

chief commercial officer Andrew Nocella told investors Thursday.

Despite reporting a 23% increase in second-quarter profits over the prior year, *******’s earnings guidance for the upcoming third quarter fell short of Wall Street expectations.

“This is a quarter where industry capacity growth has exceeded still solid demand,” CEO

This is the hidden content, please

• Sign In
• or
• Sign Up

said on the earnings call.

In recent months, airlines have flooded the market with

This is the hidden content, please

• Sign In
• or
• Sign Up

, leading to lower airfares as carriers cut prices to fill their planes as travel demand soars.

data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==

******* Airlines CEO Scott Kirby, pictured at Boeing’s South Carolina plant in 2022, said capacity growth outstripped strong travel demand in Q2.LOGAN CYRUS/Getty Images

According to the Bureau of Labor Statistics, average ticket prices in June were the cheapest in 15 years, excluding the COVID-19 pandemic years of 2020 and 2021. And in July, TSA screenings hit a record.

But as labor, fuel and other overhead costs remain high, airlines —

This is the hidden content, please

• Sign In
• or
• Sign Up

— have sold seats at a loss in a desperate attempt to generate as much revenue as possible.

“The pressure other US airlines are experiencing today is due in large part to their

This is the hidden content, please

• Sign In
• or
• Sign Up

,” Kirby said.

Nocella added: “In the past, the magnitude of the worst flying has never been this bad for the lower-margin airlines,” the ******* CCO said.

Low-cost airlines are bearing the brunt of the pain

This is the hidden content, please

• Sign In
• or
• Sign Up

also questioned the long-term financial viability of the business strategy of low-cost carriers during the airline’s earnings call last week.

“You cannot, if you are on the lower end of the industry’s food chain, continue to post losses, particularly given the health of the demand set we’ve seen over these last couple of years,” Bastian said. The carrier kicked off a series of bad news for airlines earlier in June, posting disappointing earnings that sent the entire sector down.

data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==

Delta CEO Ed Bastian, pictured onstage at CES in 2019, questioned the long-term viability of money-losing low-cost airlines. Steve Marcus/Reuters

This is the hidden content, please

• Sign In
• or
• Sign Up

for example, lost $231 million in the first quarter of 2024, while fellow low-cost carriers

This is the hidden content, please

• Sign In
• or
• Sign Up

and

This is the hidden content, please

• Sign In
• or
• Sign Up

lost $143 million and $26 million, respectively, during that same *******.

The most effective and direct method of addressing this issue for airlines is to slow the introduction of additional seats for *****. Something airlines are quickly working to do.

“It was inevitable that carriers would begin to cancel this unprofitable flying, and you see that happening in earnest in the second half of August,” Kirby said, echoing similar projections by Delta.

Based on upcoming flight schedules, Kirby said the airline expects domestic capacity growth across the industry to decrease by 5% by the fourth quarter of 2024.

data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==

******* Airlines said Q2 revenue from premium cabins such as Polaris increased 8.5% . ******* Airlines

In addition to

This is the hidden content, please

• Sign In
• or
• Sign Up

, the US mainline carriers are leaning on their premium, higher-margin cabins to help cover the losses.

******* reported an 8.5% revenue increase during the second quarter from its premium cabins, such as

This is the hidden content, please

• Sign In
• or
• Sign Up

and domestic first class.

Delta is also banking on its premium cabins, which accounted for 56% of its second-quarter revenue.

This is the hidden content, please

• Sign In
• or
• Sign Up

announced this week that it’s retrofitting its Boeing 737 fleet to add 1.3 million first-class and premium economy seats annually. The retrofit starts in September and will ensure that each Alaska Boeing 737 has 16 first-class and 30 premium economy seats.

********* Airlines will report its second-quarter performance on July 25.

Read the original article on

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up

#Airlines #scrambling #fix #unsustainable #crisis #caused #cheap #flights

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up

For verified travel tips and real support, visit: https://hopzone.eu/