Airlines could see record summer travel, but sky-high costs are causing profit turbulence

The runway… More than four years after the pandemic began, “revenge travel” is roaring in the skies. Global air travel has surpassed prepandemic levels, and as of last year US domestic air travel has nearly rebounded. Last month, the TSA screened a record 2.9M passengers in a single day, and this summer is forecast to see the most fliers ever on US airlines. While vacays have mostly led the rebound, business travel is also picking up (although it’s not expected to hit 2019 levels until 2026). To compete with budget airlines like Spirit and Frontier, legacy carriers like Delta Air Lines and United Airlines have offered more no-frills fares. United’s “basic economy” sales jumped 35% last quarter from a year ago.

The turbulence… Despite high demand, US carriers lost a combined $1.3B in the first quarter (48% more than last year) as they grappled with higher fuel and labor costs. Psst: it’s the fifth year in a row that Q1 has been unprofitable for the industry. Boeing’s 737 fallout is also causing a summer squeeze, with US airlines expected to receive 32% fewer planes than planned. Southwest Airlines (which fully relies on Boeing jets) had to slash capacity for the year. Meanwhile, a coalition of airlines sued the US Department of Transportation last month over a new rule requiring them to show extra fees (think: checked bags) upfront. An airline lobby said the rule will “greatly confuse consumers,” but the gov’t estimates it could cut $543M/year in fees.

• In the charter skies: The FAA is looking to tighten rules on semi-private flight companies like JSX, which have taken off as a middle ground between private and commercial jets.