USD Strength Buoys Major Airlines as Travel Demand Soars
The strengthening US dollar is providing a tailwind for major airlines, as American travelers take advantage of their increased purchasing power abroad.
Stronger US Dollar, Cheaper European Vacations
A strong dollar makes US products more expensive overseas, but for US travelers, it makes European vacations a relative bargain. Delta Air Lines President Glen William Hauenstein recently stated, "Europe is an incredibly screaming buy...as a tourist destination."
Trans-Atlantic Demand Spikes
The sentiment was echoed by United Airlines and American Airlines. All three posted record-breaking quarters, with United and Delta hitting all-time highs. Even American Airlines, which faced a weak outlook due to corporate sales strategy and non-fuel costs, acknowledged the benefits of the strong greenback.
Increased Premium Travel Demand
The surge in international travel has led to increased demand for premium travel options, including extra legroom, refundable tickets, and early boarding. United Airlines has expanded its routes to include destinations such as Marrakesh, Morocco, and Nuuk, Greenland.
Drop in Fuel Costs
Airlines have also benefited from lower fuel costs in recent quarters due to falling oil prices and a stronger dollar. United Airlines reduced its fuel costs by 19% compared to the previous year.
Overall, the strong US dollar has positively impacted major airlines by boosting trans-Atlantic travel demand and decreasing fuel expenses.