When airfares are cheap, the consumer is happy. After all, we have seen a number of deals for both domestic, and international travel as airlines have competed with one another for your revenue. However, there are a group of people (which may, ironically enough, include the airline consumer) who are proving to be unhappy with these lower airfares.
A recent Bloomberg Business article highlighted the perils of low airfare for the stock markets, and for shareholders.
Shrinking fuel bills give carriers the flexibility to win business by undercutting each other on tickets — and to Wall Street’s dismay, they’re doing just that.
Airline executives have cited Dallas, Chicago, Houston and Orlando, Florida, as markets with prices under pressure. Spirit and American, for example, both offered one-way tickets Monday for a Nov. 9 Dallas-to-Orlando flight for less than Greyhound’s $89 bus trip. Domestic coach fares fell in August to the lowest in almost five years, according to data compiled by Bloomberg.
Despite a record year in 2015 for annual earnings by U.S. airlines, raking in more than $18 billion in profits, the Bloomberg U.S. Airlines Index fell 0.2% this year.
Bloomberg U.S. Airlines Index
So the news for you, the traveler, seems to be great, but what happens if you also are a shareholder!