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JetBlue Airways’ Passenger Demand Outpaces Capacity Growth

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JetBlue Airways’ traffic growth

In August 2018, JetBlue Airways’ (JBLU) traffic has grown by 6.7% year-over-year, 1.9% higher than its capacity growth of 4.8% YoY.

In fact, JetBlue’s passenger demand has managed to outpace traffic for the past seven months. Traffic growth lagged behind capacity growth only in January 2018.

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Peer comparison

Year-to-date, JBLU’s traffic has grown by 6.0% YoY, higher than the 4.7% YoY capacity growth recorded in the period. For the full year 2016, JBLU’s traffic rose 9.6% YoY, and in 2015, it clocked growth of 10.3% YoY.

Legacy player United Continental’s (UAL) traffic growth has also exceeded its capacity growth for this period. Through August 2018, Southwest Airlines (LUV) traffic has grown 2.6% YoY, similar to its capacity growth. Delta Air Lines’ (DAL) demand growth has also matched its capacity growth YTD in August 2018. For details, read Delta Air Lines Down 3% after Reporting Record August Traffic.

Global passenger travel

According to the International Air Travel Association’s (or IATA) latest monthly report, global passenger travel demand this year is expected to grow at a higher pace than in 2017. For July 2018, global travel demand grew at a strong pace of 6.2% YoY, albeit slower than the 8.1% growth seen in June 2018. In July 2018 YTD, passenger travel demand clocked growth of 6.9% YoY.

Although the demand continues to remain robust, IATA expects demand to slow down, as lower airfare becomes a thing of the past. Investors can gain exposure to JetBlue Airways by investing in the iShares S&P Mid-Cap 400 Value ETF (IJJ), which holds 0.69% of its portfolio in JBLU.

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