Airlines are always a pain to deal with. Yet they remain a staple in our traveling plans. That’s why it’s always interesting to see where the airline industry is headed, especially because it’s a cyclical industry. Has the airline exchange traded fund’s (ETFs) ship come in yet?
According to John Crawley of Reuters, travel on major U.S. airlines fell by 1% in July. Typically, July is one of the busiest months, so this data shows that the industry is still trying to find its bearings in the current economy.
Despite the lower traffic, airlines were able to improve their bottom line with higher fares. The cost to fly one mile rose 17% last month compared to the same period last year. However, it was lower than June’s 22% increase, again, marking some weakness in the sector. [5 ETFs That Could Move on Manufacturing Numbers.]
The Air Transport Association released a report in which it said, “Put simply, the U.S. airline industry continues to be confronted by a systematic inability to cover its cost of investor capital or … to exceed break-even profitability on a sustainable basis.”
Contrarily, Brent Jang of Globe Investor saw a brighter picture in the report issued by the ATA. According to the ATA, premium travel surged almost 12% in the first half of 2010 compared to last year. In addition, economy bookings rose 6.3%. [Airline ETF Cleared For Takeoff.]
Despite the ATA’s less than optimistic outlook for the second half of this year, global carriers remain optimistic that an increase in global trade will help fuel corporate travel and make up for the loss in consumer traffic.
Yet air traffic models and fare forecasts are not the only things to worry about. In addition to being a capital-intensive industry, the airline industry is being attacked by federal regulators for canceled flights and maintenance problems, according to Marketplace.
Specifically, regulators plan to hit American Airlines with a $25 million penalty for various code violations that led to thousands of canceled flights. If the regulators win, this may set a very expensive precedent for other carriers.
According to John Crawley of Reuters, travel on major U.S. airlines fell by 1% in July. Typically, July is one of the busiest months, so this data shows that the industry is still trying to find its bearings in the current economy.
Despite the lower traffic, airlines were able to improve their bottom line with higher fares. The cost to fly one mile rose 17% last month compared to the same period last year. However, it was lower than June’s 22% increase, again, marking some weakness in the sector. [5 ETFs That Could Move on Manufacturing Numbers.]
The Air Transport Association released a report in which it said, “Put simply, the U.S. airline industry continues to be confronted by a systematic inability to cover its cost of investor capital or … to exceed break-even profitability on a sustainable basis.”
Contrarily, Brent Jang of Globe Investor saw a brighter picture in the report issued by the ATA. According to the ATA, premium travel surged almost 12% in the first half of 2010 compared to last year. In addition, economy bookings rose 6.3%. [Airline ETF Cleared For Takeoff.]
Despite the ATA’s less than optimistic outlook for the second half of this year, global carriers remain optimistic that an increase in global trade will help fuel corporate travel and make up for the loss in consumer traffic.
Yet air traffic models and fare forecasts are not the only things to worry about. In addition to being a capital-intensive industry, the airline industry is being attacked by federal regulators for canceled flights and maintenance problems, according to Marketplace.
Specifically, regulators plan to hit American Airlines with a $25 million penalty for various code violations that led to thousands of canceled flights. If the regulators win, this may set a very expensive precedent for other carriers.
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