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Is JetBlue Airways’ Traffic Growing Like Its Capacity?

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JetBlue Airways’ traffic growth

For May 2017, JetBlue Airways’ (JBLU) traffic has grown 3.8% YoY (year-over-year), which is below its 8.2% capacity growth in April 2017. That pattern was expected, given the capacity growth in the period.

JBLU’s traffic growth has outpaced capacity growth in three of the five months of 2017. Capacity growth fell 0.70% YoY in February 2017, or 0.60 percentage points. It fell 4.2% YoY in March 2017, or 1.4 percentage points.

Year-to-date as of May 2017, JetBlue’s traffic has recorded growth of 4.7% YoY, which is slightly higher than the 4.6% YoY growth in capacity in the same period.

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Growing global economy helps

Research by the IATA (International Air Transport Association) has found that passenger travel demand closely tracks global economic growth. Year-to-date as of April 2017, global passenger travel demand has risen 10.7% YoY. That’s the highest growth for the past six years. The IATA expects low airfares and recovering global economy to be the reason behind this high growth. Such high demand bodes well for airlines, especially low-cost carriers such as JetBlue.

Outlook for JBLU

Since JBLU’s traffic has closely matched its traffic growth, investors can expect traffic to grow in the range of 4.0%–6.0%. JBLU’s low-cost strategy and high capacity growth compared to legacy players Delta Air Lines (DAL), United Continental Holdings (UAL), and American Airlines (AAL) will help it see higher traffic growth than those peers.

You can gain exposure to JetBlue Airways by investing in the SPDR S&P 400 Mid Cap Value ETF (MDYV), which invests 0.98% of its portfolio in JBLU.

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