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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.


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