StashLearn
Financial education, no lectures.
Ask
Get the app

Join millions of investors on Stash

Investing, simplified

Start today with as little as $5
Get the app
Money News

How Discounters (And the Weather) are Making it Tough for Big Airlines

September 08, 2017

1 min read

It’s been a tough summer for many of the big airlines. 

The value of a key stock index that comprises the major airlines fell by 7.5%, and in aggregate lost close to $10 billion of market value in August, according to a recent report from Bloomberg.

The major airlines include American, Delta, United, JetBlue and Southwest.

Bad for investors, good for consumers?

Big airlines have suffered a double whammy of economic forces–some of them prompted by the weather.

These air carriers are under increasing pressure from smaller airlines that have cut the cost of tickets on a wide range of routes. In June, for example, the ultra-low cost airline Frontier announced it would more than double the number of routes it flies in the U.S., with teaser rates for some one-way tickets as low as $20.

To keep up, major airlines have been cutting ticket prices. The average domestic airline ticket departing from Los Angeles International, for example, fell by 5%, according to the Bureau of Transportation Statistics.

Adding to the pressure recently, the price of jet fuel has also increased since Hurricane Harvey hit Houston in late August. The storm reduced by 4.4 million barrels, or 24% of the oil refining capacity, according to reports.

Economic challenges for the airlines are likely to continue.

Delta, Spirit Airlines, and JetBlue all reportedly cut their revenue forecasts for the coming months.

Top Takeaways:

Read more: Hurricane Harvey: How a Big Storm Affects the Market

 

By Jeremy Quittner
Jeremy Quittner is the financial writer for Stash.

Quiz

Quizzical Education: Test Your Money News IQ

Test your money news smarts.

Take the quiz
Explore more articlesChoose a topic to learn more about
Technology market news politics love and money Retirement
Disclaimers

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.