Despite the ATA’s less than optimistic outlook for the second half of this year, global carriers remain optimistic that an increase in global trade will help fuel corporate travel and make up for the loss in consumer traffic.
Yet air traffic models and fare forecasts are not the only things to worry about. In addition to being a capital-intensive industry, the airline industry is being attacked by federal regulators for canceled flights and maintenance problems, according to Marketplace.
Specifically, regulators plan to hit American Airlines with a $25 million penalty for various code violations that led to thousands of canceled flights. If the regulators win, this may set a very expensive precedent for other carriers.
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- Claymore/NYSE Arca Airline (NYSEArca: FAA) [ETF Spotlight: FAA]
- iShares Dow Jones Transportation (NYSEArca: IYT): Airlines are about 8% of the fund
Sumin Kim contributed to this article.