It’s always interesting to hear what airline executives are thinking, as it gives us a good idea of what we can expect going forward. Delta’s CEO, Ed Bastian, was on CNBC yesterday, and had some interesting things to say following the Donald Trump victory in the U.S., as it pertains to the Gulf carriers, airfare forecasts, etc.
A lot of what he says simply reflects what has happened to the markets over the past several weeks, but there’s also some airline specific stuff in there. I’d highly recommend checking out this four minute clip if you have the time:
The highlights (I realize much of this obvious, but…)?
- There’s an increase in consumer confidence following the election, and optimism that they’ll start to get things done in Washington
- Fares are starting to stabilize, and Delta is expecting that first quarter unit revenue will be flat to up to 2%, after declining fares the past couple of years
- The U.S. carriers have of course been battling the Gulf carriers, and Bastian is optimistic this will be addressed under Trump — “our president-elect ran on a platform of protecting U.S. jobs and enforcing U.S. trade treaties, and we don’t think there has been a more important industry that has been violated with respect to trade treaties and the potential loss of jobs than the airline industry, so we look forward to having the opportunity to make our case”
- Consumer confidence is much stronger than they were seeing through the summer, and Bastian thinks improvements in yields are industry-wide, and not Delta specific
Many may remember that Delta’s former CEO, Richard Anderson, wrote an op-ed endorsing Hillary Clinton, which made many points about what her presidency would mean for the airline industry.
Clearly a large part of the increased confidence is simply the election being over, and the fact that companies now have a better idea of what they can expect.
Anyway, I’m not trying to be terribly political here. Perhaps the biggest takeaway is that we’ve seen airfare on the decline for the past two years, and Delta’s CEO is expecting that trend to reverse in the first quarter, though not drastically. Between increased fuel and labor costs, they’ll certainly need fares to increase in order to deliver decent results.