How much more can air travelers take?
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Even for those accustomed to the indignities of air travel, it's clear that right now is a particularly terrible time to fly.
The big picture: The Iran war is creating major travel headaches on top of an already chaotic situation at airports in the U.S., raising the prospect of a downturn in the travel industry.
The latest: More than 52,000 flights to and from the Middle East have been canceled since the war began on Feb. 28, according to data cited by the New York Times.
- The conflict is spiking fuel prices — the average price of a gallon of jet fuel is up about 60% this month, much of that a result of an increase in refining costs because the war is disrupting key infrastructure, per the Argus Jet Fuel Index.
- Some airlines are already raising prices, per NBC News, and the industry warns that a sustained conflict could have long-lasting impacts on prices across the industry.
- At the same time, airport security lines in the U.S. have grown comically long in the wake of the partial government shutdown.
How much more can travelers take?
- "The cynical might assert that air travelers have gotten used to taking abuse, so they'll begrudgingly put up with even more," Kent Fung, vice president at Fundstrat Global Advisors, wrote in a note Tuesday.
- "But the proverbial camel's back gets broken with a single straw, and what's happening in the Persian Gulf is quite a heavy straw indeed."
Zoom out: The moment could grow so sufficiently bad that it marks a travel breaking point — akin to what happened in the oil crisis of the 1970s, Fung writes.
- Back then high gas prices, and long lines at the pump drove a real shift for Americans in terms of fuel consumption — they started buying smaller, fuel efficient Japanese cars and took steps to conserve energy.
- Companies also redesigned how they worked to become more fuel efficient.
- If the current travel woes deepen, Fung said, perhaps the travel sector will see a similar kind of shift.
Zoom in: Airline stocks are having a rough year — Delta is down 6% from January. United Airlines is down 17.5%, and American Airlines is off nearly 30%.
- Yesterday, however they caught a bit of a bounce after both Delta and American raised their revenue outlooks for the first quarter.
Reality check: It's only been a few weeks. Air travelers are used to punishment.
The bottom line: Americans' appetite to spend on going places has been a driver of economic growth in recent years. Even after our zeal for revenge travel subsided, spending continued to grow.
- Now that could change.
