Max squeeze? Grounded jets ding Southwest's stock price and could mean higher fares – Dallas News

This post was originally published on this site

Southwest had planned to increase capacity by 3.5% to 4% in the first quarter. In late March, as concerns about the Max continued, Southwest scaled back its growth forecast to about 1%.

That would be the slowest year-over-year growth for a quarter since 2014. And analysts are projecting a similar growth rate for Southwest for this summer.

The Max has been grounded in the U.S. since March 13, following a second fatal crash in Ethiopia. On Sunday, American Airlines said it also would remove the Max from its schedule for longer, suspending the aircraft until Aug. 19. On Monday, United Continental suspended Max flights until early July.

Southwest and American have 34 and 24 Max aircraft in their fleets, respectively. United has 14.

Together, Southwest and American said they expect to cancel about 275 summer flights a day because of the Max. That’s over 40,000 seats, which is still a small fraction of total passengers — about 1.5 percent of American’s daily flying in the summer, the airline said.

But supply and demand help drive fares, and that equilibrium will be disturbed, said Rick Seaney, CEO of FareCompare, a Plano-based website that tracks fares.

“When all is said and done, ticket prices will be up just because there are fewer seats,” Seaney said on Monday. “Summer is the peak season, thanks to leisure travelers, and most flights will be full.”

In the aggregate, he projects that the average fare increase will be small, but the impact will vary by location. Routes from smaller cities will face higher increases because carriers have less competition, he said.

“Don’t expect Dallas-to-L.A. prices to go up very much,” Seaney said. “There are too many competitors.”

This post was originally published on *this site*