Airline shares surge after airfare data shows pricing power returning

Shares of major U.S. carriers jumped on Tuesday after upbeat airfare data for July signaled improving pricing power for the industry, as airlines bring capacity in check to align with a soft-demand environment.

Shares of legacy carriers United Airlines, American Airlines, and Delta Air Lines jumped nearly 10% each, while budget rival Southwest Airlines gained 4% in afternoon trading.

Smaller peers Alaska Airlines and JetBlue Airways rose about 10% each, and low-cost carrier Frontier Airlines surged 22%.

Data from the Labor Department’s Bureau of Labor Statistics on Tuesday showed airfares rose 4% in July after slipping 0.1% in June, marking their first increase in six months.

Uncertainty stemming from President Donald Trump‘s sweeping tariffs and budget cuts has prompted travelers to curb discretionary spending and reassess plans.

A soft-demand environment, particularly from budget-conscious domestic travelers, had forced carriers to discount fares, squeezing margins despite summer typically being their peak moneymaking season.

Airlines have since been trimming seats on offer and readjusting routes to keep their pricing power in control and shield margins.

During their second-quarter earnings calls in July, major executives expressed confidence in the industry’s ability to cut capacity and boost airfares in the latter part of the year.

—By Shivansh Tiwary, Reuters