Tariffs could drive up the cost of your summer travel

Trade tensions could be spilling into the travel industry.

Transcript

00:00I think there are some potential factors that are very hard to anticipate today.

00:06But on a basic level, individuals might be reluctant to plan discretionary spending.

00:12Companies and investors might have poor visibility in terms of their own investment plans for the year.

00:23So the latter factors, for example, could delay business travel

00:28or reduce the demand altogether.

00:30The tariffs themselves, it's still a little bit unknown what impact we're going to have

00:35on airline seat mile cost with respect to the procurement of equipment and maintenance.

00:42So on that level, we could see higher costs start to seep through into earnings results,

00:50at least over the short term.

00:52Certainly those are the ones I would call out and maybe other subtle effects

00:57that are harder to call out, including the extent to which U.S.

01:02consumers might be reluctant to do overseas trips.

01:05Regarding whether consumers should think about tariffs making travel more expensive,

01:10that is absolutely a risk.

01:12So, for example, if the tariffs do put additional pressure on aerospace supply chains,

01:20that will increase equipment costs.

01:22That could also worsen the scarcity of new equipment per capita.

01:28So with less capacity coming through, that indeed could get rolled into price point,

01:34especially for the network airlines.

01:37And that's something at this juncture, I would say, is a key watch item.