Is JetBlue Airways’ Traffic Keeping Up with Its Capacity?


Nov. 20 2020, Updated 4:06 p.m. ET

JetBlue Airways’ traffic growth

For July 2016, JetBlue Airways’ (JBLU) traffic grew by 6.6% YoY (year-over-year), higher than its July 2016 capacity growth of 5.5% YoY.

Airline traffic is measured by RPM (revenue passenger miles). RPM is the number of revenue passengers multiplied by the total distance traveled.

From January to July 2016, JetBlue Airways’ traffic grew by 11.2% YoY. For 2015, JBLU’s traffic grew by 10.3% YoY. From January to July 2016, traffic growth was similar to capacity growth, while traffic growth was slightly higher than capacity growth during the same period in 2015.

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Slowing passenger travel

Research by the International Air Transport Association has found that passenger travel demand closely tracks global economic growth. This year got off to a great start with a 6% YTD YoY increase in global passenger demand. However, the pace is slowing down.

Also, the recent terrorist attacks in Paris, Brussels, and Nice and the Orlando shooting have impacted travel demand. In fact, the Brussels terrorist attacks in May 2016 led to traffic growth of 4.6% for the month, the slowest since January 2015.

This, coupled with global economic uncertainties, will weigh on passenger travel. On the other hand, airfares have been declining since January 2016 and may help growth in travel demand.

Also, JBLU’s lower costs than those of legacy players American Airlines (AAL), Delta Air Lines (DAL), and United Continental Holdings (UAL) will help it see higher traffic growth than these peers.

JBLU makes up 0.37% of the total holdings of the SPDR S&P MidCap 400 ETF (MDY).


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