During the past few months, the commercial aviation industry has been subjected to economic uncertainty. The threat of stagnation, the escalation of commercial wars, and volatile energy prices forced airlines to control growth forecasts negatively for the next year, mostly due to fears of how to change the total economic conditions and policy decisions that may affect the request of passengers.
Airlines are also scheduled to see their costs, especially if the trade war between the United States and its largest trading partners continue. American Old tankers
Low -cost airlines may have to deal with the costs of purchasing very high aircraft with the vision of the average prices that decrease dramatically. In this article, we will take a look at the macroeconomic factors that airlines will have to see when determining the strategic moves that must be taken before the summer travel season, which is the most crowded period of the year.
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Airlines need to be familiar with how to influence the recession on the request of passengers
Indicators (indicators) of the total economy: consumer confidence index, performance of the extensive stock market indicators
The first and most important thing airlines need to be familiar with it is how the macroeconomic factors can affect passengers’ request for flights. Old transport companies and low -cost transport companies face different demand schedules, and both are likely to deal with the negative effects of the group of conditions established by modern economic conditions. There are two main ways to understand how to choose airlines to monitor the level of demand they can expect.
The first place for airlines is to look at the consumer confidence index, a scale that has come to record high levels in the period between Trump’s election and his theorization. When consumer confidence is high, passengers are more keen to spend on luxuries such as holidays. With the confidence of the consumer very low at the present time, consumers are unlikely to spend on unnecessary goods and services. This will eventually reduce the demand for holidays, even to destinations that may be more affordable.
Second, one can also use the main stock markets ’indicators’ revenues for a better feeling of how companies are in the economy. When companies operate well, they are more likely to travel to visit customers, make events, meet with other companies, and even make sales or acquisitions. As a result, the increase in stock performance is likely to be associated with higher quantities of commercial travel, as old transport companies derive most of their revenues from a small segment of large -scale business travelers.
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Airlines need to monitor fuel prices carefully
The total economy index: the price of jet fuel
Although it is largely related to global crude oil prices, it is important for airlines to carefully follow the price of jet fuel. Currently (historically), jet fuel has always been the most important and most volatile of airlines. As a result, entire departments have been formed in various transport companies to support fuel hedge initiatives. These allow airlines to monitor the price of oil and carefully increase purchases when the price is lower.
The important indicator for airlines to see is the price of jet fuel and how it is currently decreasing. With more energy that overwhelms the market from the Middle East and other OPEC countries, the price of oil, and therefore, the price of jet fuel fell constantly. This has led to a very drop in oil prices, which is hurried many European transport companies to benefit from it.
However, airlines need to monitor the fuel price mode carefully. Under normal conditions, transport companies will be able to buy additional fuel when the price is very low. This will allow them to use this cheaper fuel when the prices rise. Currently, the prices are very low, but they may not remain this way, which motivates customers to buy fuel now. However, the challenge is that most airlines are tied in cash at the present time, which makes it difficult for them to buy excess fuel in large quantities.
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Airlines will need to monitor foreign currency markets
Kidney economy indicators: GBP/USD, EUR/USD
During the month of summer, the aviation industry profits were strengthened historically through very strong demand in the high -end market. The profitable flights between the United States and Europe have continued to make airlines over the past two decades, especially when it comes to excellent high -end services to high -yielding destinations such as Greece, Italy and Spain. However, these major international travel markets will not be completely immune from the effects of the turning of the macroeconomic economy. Airlines have already started calculating a possible decrease in demand for these critical European roads.
The relative value of the US dollar against the main European currencies such as the British British pound and the euro historically helped to inform how the demand for these methods has shifted. For those who think about traveling to Europe this summer, the most valuable and valuable euro will significantly increase the relative price for everything that one may choose to buy. As a result, leave in places such as the United Kingdom, France or Italy will be increasingly expensive for Americans, especially those who can choose to travel to a more affordable destination. During the past few months, The dollar has lost large parts of its value in these main marketsMany transport companies lead to the expectation of weaker performance in many of these methods.
Airlines have already started calculating low interest in traveling across the Atlantic. Since many of these methods are some of the highest return, airlines should be able to fill their planes on these services. As a result, airlines, such as Delta, began to reduce the overcoming power during the summer months, and instead choose to redistribute them to many major local roads. For example, the Delta air lines of the total across the Atlantic power reduced more than 3 %, and major planes such as the Boeing 767-300er plane were placed on home services, such as high-capacity daily flights from Atlanta Hartsfeld-Jackson International Airport (ATL) to Ted Stevens International Airport (ANC) in the anchor.
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Airlines need to keep their eyes on possible commercial barriers
Multiple economy indicators: United States tariff rates/European Union and the United States/United Kingdom
Customs tariffs are likely to be the largest long -term airline companies, given the last period of economic uncertainty, which prompted us the shares of airlines to take. The definitions that were placed in their place (In addition to the tougher costs that have been proposed) will significantly increase the costs of buying aircraft for US tankers, something that will undoubtedly put them in a more strict position in the coming years.
Airlines, such as the Delta, decided to combat these potential increases in purchasing prices by not delivering any new plane that is not exempt from customs tariffs. The carrier was looking to expand her fleet by receiving several new Airbus Wideboys, but it seems that he will have to put these plans in the next few months amid these industrial challenges. In the end, this type of company is actually for airlines such as Delta, which was not looking to increase the capacity in the first place.
Delta loses relatively little by not connecting the new Airbus models that can be subject to tariffs in the coming months. For beginners, the airline was not looking to add the capacity that these aircraft would provide, and it can now provide the money that they might spend otherwise, as the airlines mostly pay the price of new aircraft upon delivery. The only real loss is to increase the efficiency of fuel consumption that these models can provide for the airline fleet. With fuel prices very low, this was probably the least fears of Delta at the present time.
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Airlines need to be careful not to increase possible interest rates
Multiple economy indicators: Consumer price index (CPI) and federal funds rate
One of the biggest concerns in the wake of this last period of economic uncertainty This inflation can return soon. High inflation levels may be caused by the price increase in tariffs, as many goods are to become more expensive.
This is likely to increase central banks around the world (and the Federal Reserve of the United States) to increase interest rates, a process that would help fight inflation by limiting borrowing and investing in the economy. The Federal Reserve Micro Prices have helped to suppress inflation in the United States over the past two years.
Airlines face some challenges when there are higher interest rates in the economy. For beginners, clients are less willing to spend on airline tickets, as the price of load balances increases significantly. Moreover, it becomes difficult for airlines to borrow money, which is necessary to finance the acquisition of new aircraft.
