Boeing Delays Could Put a Squeeze on Travel Budgets

Due to Boeing's manufacturing issues, passengers may have to pay more for air travel and have fewer flight options.

As it deals with the aftermath of an incident on an Alaska Airlines aircraft on January 5, including fixing manufacturing and other operational flaws, the industry leader in aviation is facing production delays. This is causing airlines like United Airlines and Southwest Air Lines to have delays in receiving aircraft deliveries.

Boeing's 737 Max Orders and Impact on Airlines

According to statistics from Boeing, the company had about 4,800 737 Max orders returned as of the end of February. American Airlines acquired 71 737 Max aircraft, whereas Delta Air Lines purchased 100, Ryanair purchased 219, Southwest purchased 483, and United purchased 349. They did not provide an estimated date of delivery. In the first two months of this year, 42 737 Max planes were delivered by the aircraft manufacturer.

Henry Harteveldt, an airline analyst with Atmosphere Research Group, conveyed to CBS MoneyWatch that the challenge for airlines lies not in reducing flights, but rather in their inability to expand their flight offerings as anticipated for the upcoming summer season. This limitation is disappointing news for both consumers and airlines, as it means fewer flight options for travelers and reduced revenue potential for airlines. Harteveldt emphasized that this situation represents a lose-lose scenario for both parties involved.

When approached for comment on airfare prices, Southwest declined to publicly discuss the matter. Similarly, United did not provide any comments regarding airfares.

Airlines' "business and capacity plans into disarray for most of the second half of the year," according to Robert Mann of R.W. A consultancy business for the airline sector is Mann & Company.

Southwest, which operates just 737 aircraft, will be particularly hard hurt by Boeing's problems. The airline has stated that it will not be receiving the 86 Boeing planes it ordered this year, which means it will not be able to expand flights.

Impact on Airline Capacity and Ticket Prices

According to Mann, the inevitable reduction in airline capacity in the second half of the year, compared to earlier indications, is likely to lead to higher ticket prices. Mann anticipates that consumers will have fewer flight options, particularly on domestic and short-haul international routes like those to Mexico and the Caribbean.

Data from the Airline Reporting Corporation shows that airfare prices rose by approximately 6% in February. Mann forecasts that prices could increase by up to 10% in some cases, translating to an additional $57 on an average fare of $573. For a family of four, this could mean an extra $230 in expenses. Mann emphasized that these price increases could have a significant impact on travelers.

The public perception of flight safety holds paramount importance for airlines and the air travel industry. In a worst-case scenario, Boeing's challenges could potentially cause some travelers to reconsider flying due to perceived risks.

However, Scott Keyes of Going.com believes that the production issues faced by aircraft manufacturers are unlikely to significantly alter consumer behavior. According to Keyes, travelers typically purchase tickets from airlines such as Delta, United, or Spirit, rather than directly from manufacturers like Boeing or Airbus. Therefore, the specific type of aircraft operating the flight typically does not factor into travelers' decision-making processes.

Nevertheless, if bookings were to decline, airlines may need to reduce fares in order to entice passengers back to air travel.