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TSA TRAFFIC DIPS, AIRLINES LOSE ALTITUDE ON AIR TRAFFIC CONTROL GLITCHES, DAMPENED TOURISM DEMAND

Delays and canceled flights due to tech failures and staff shortages have plagued Newark International Airport in recent weeks, causing a ripple effect which has led to delays and cancellations at other airports, many of which are facing the same problems to a lesser degree.

This has prompted investigations from the Federal Aviation Authority (FAA) and highlighted problems in the wider air traffic control network infrastructure after Transportation Secretary Sean Duffy proposed a multi-billion dollar overhaul of the system.

At the same time, the Department of Homeland Security has warned that travelers without a "real ID" (compliant licenses or U.S. passports, for example) will likely face enhanced security procedures after the law requiring "real IDs" took effect on May 7.

So what does that mean for U.S. air carriers and domestic passengers?

A look at the Transportation Security Administration (TSA) data shows that over the seven days ended May 19, an average of 2,601,910 travelers kicked off their shoes and placed them in bins at airport security checkpoints. That's down about 1% from last year's corresponding 7-day average.

This, despite the fact that airfares have fallen for the last three straight months according to CPI data.

As for commercial airlines, they are also contending with what will likely be a 7% drop-off in international tourism to the United States in 2025, according to the World Travel and Tourism Council, due to more stringent border security and President Trump's combative international profile.

All the above have become headwinds for U.S. commercial carriers.

As the graphic below illustrates, the S&P 1500 Airlines index .SPCOMAIR is down 16.1% so far this year, compared with the broader S&P 500's .SPX 1.4% gain over the same time frame:

(Stephen Culp)

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