US Airlines: Traffic Limits Could Harm Travelers More Than Airlines
We will not alter our forecasts for the time being, and will monitor air travel disruption in the coming days.
To reduce strain on the unfunded and understaffed air traffic control system, the US Federal Aviation Administration announced restrictions on air traffic at 40 busy airports, set to go into effect on Friday, Nov. 7. This move would reduce flights by about 10% until the US government regains funding.
Why it matters: Akin to a widespread weather system, the restriction will cause hundreds of flights to be rescheduled, canceled, or merged, inconveniencing travelers, especially if the effect lasts until the busy Thanksgiving travel week.
- Airlines have communicated their strategies to adapt to the restrictions, indicating their intention to prioritize maintaining long haul and hub traffic, which harbor most of their passengers and revenue.
Between the lines: As the flying public feels the consequences of the US government shutdown more directly, the effects of the restriction may increase political pressure to restore the funding of federal agencies.
The bottom line: Because the traffic restriction applies more or less uniformly across the United States in busy airports, we don’t see it affecting any one airline much more than another. We will not alter our forecasts for the time being, and will monitor air travel disruption in the coming days.
Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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