Gauging the Impact of the Electronics Ban on US Airline Traffic



Some US airlines stand to gain, lose indirectly

No US airline currently offers direct, non-stop flights from the airports affected by the recent electronics ban to the US. So there doesn’t appear to be a direct US airline gain from this ban. However, the ban will still likely divert business passengers from the banned airports to other popular European airports in the UK, Germany, Netherlands, or France.

This probability means that airlines in these countries—British Airways, Lufthansa, KLM, and Air France, to name a few—stand to gain market share from affected airlines. At the same time, many US airlines partner with these European airlines and are thus likely to benefit indirectly from the ban.

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But some US airlines also stand to lose business due to the ban. Alaska Airways and JetBlue, both have alliances with Emirates that help these airlines transport their customers from airports in the Persian Gulf region. Accordingly, a reduction in Emirates’ business will also impact these airlines’ business.

New routes, new opportunities

Of course, this ban also gives US airlines the opportunity to open new direct routes to the Gulf Persian region. However, the economics—particularly in terms of cost versus opportunity—may not really favor such a decision.

Notably, investors can gain exposure to airlines by investing in the SPDR S&P Transportation ETF (XTN), which invests ~3% of its holdings in Southwest Airlines (LUV), ~3% in Alaska Airlines (ALK), 2.8% in Allegiant Travel (ALGT), 2.7% in United Continental (UAL), 2.7% in American Airlines (AAL), and 2.7% in Delta Air Lines (DAL).

But how will this electronics ban impact regular passenger traffic? Continue to the next part for further analysis.


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