This week in the world of travel…
Four times per year, airlines report their quarterly earnings to shareholders. Earnings periods often cause volatility, and this time around was no different. Here’s what we learned:
- They’re still making lots of money. Not only did they generate billions of dollars in earnings in 2018 but they will also likely make more money in 2019. Why is that? In addition to rising fares, oil prices are down. For example, a penny change in the price of oil is worth approximately $35 million in annual income to American.
- Hub flights will get pricier. An airline “hub” is a city where it has a dominant market share. Examples include American in Dallas and Delta in Atlanta. Flights with a hub as the origin or destination tend to be more expensive than the average flight, since a dominant market share means that an airline controls pricing. For instance, there are a lot of ways to get from coast to coast, but if you’re flying to Atlanta, you’re probably on Delta. How strange is airline pricing? Think of it this way: A flight from, say, Providence, RI to Atlanta could cost more than a flight from Providence to the west coast with a connection in Atlanta. As airlines face increasing competition from low cost carriers, they’re retreating to cities where they know they can raise prices. Good luck to those of you who live in Charlotte.
The Norwegian Air Saga
Not this again. Norwegian Air, the small carrier that makes a big difference, is still alive. For now. Its fate has been going back and forth, but it’s once again solvent. There had been talk of British Airways taking over the carrier with the purpose of shutting them down, but that fell apart. Yesterday, however, they announced a private investment of $353 million, which would keep them flying. The consequences, though, were a significant drop in the stock price. More shares means fewer dollars of earnings per share.
The saga continues…
Free Uber After The Super Bowl
Uber is offering free rides home to residents of the losing Super Bowl team’s city. Simply call for a car within an hour of the game and they’ll pay up to $50 toward your fare.
That’s probably a good thing. I hear that traffic in LA is awful.
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