Airlines are benefiting from strong demand, rising fares and lower fuel costs alongside flat capacity, with future gains hinging on whether "capacity discipline" holds as comparisons tighten into the summer, BofA Securities said Monday in a report.

The Airline Fare Consumer Price Index in May rose almost 27% from a year earlier, and the Air Passenger Services Producer Price Index increased 14%, the report said. The Airline Reporting Corp.'s average ticket price rose more than 18%, with economy fares continuing to outperform premium cabins for a third straight month, BofA said.

Into June, Bank of America's "aggregated credit and debit card data suggests momentum remains intact, with airline spending returning to double-digit growth, supported by strength in spend per transaction," the report said.

Near-term comparisons will tighten as the industry enters peak summer, following an easier Q2 backdrop, BofA said. Late June and July will be key in determining whether current demand strength can persist as comparisons from a year earlier normalize, the report said.

BofA raised its price target to $93 from $78 on Delta Air Lines (DAL), to $145 from $140 on United Airlines (UAL), and to $16 from $14 on American Airlines (AAL).

Delta shares rose 1.8% in Monday trading, United climbed 0.9%, and American advanced 2.8%.

Price: 85.72, Change: +1.54, Percent Change: +1.83