Despite airline scandals, carriers' stock prices keep climbing

A passenger is bloodied as he is dragged from his seat in April after refusing to give it up to crew members on a United Airlines flight.

Later that same month, a family flying home from a Hawaiian vacation is booted from a Delta Air Lines flight after a dispute over seating for an infant.

In May, Violence erupted at Fort Lauderdale-Hollywood International Airport in Florida after Spirit Airlines canceled several flights because of a labor dispute with pilots.

All three scenes have become content for viral videos, viewed by millions of people worldwide. But despite such ugly incidents involving the nation’s airlines, their stock prices have continued to rise.

Shares of American, Delta and United have each climbed by at least 5% this year while Southwest Airlines has climbed 20%. A New York Stock Exchange index of airline stocks, Arca Airline Index, has jumped nearly 150% over the last 10 years.

While airlines suffer short-term reputation damage by such incidents, experts say the industry has become so consolidated after a series of mergers and acquisitions that it would be difficult to get travelers to abandoned their favorite airline.

“Business travelers, the most lucrative customers from the airline’s perspective, tend to stick with airlines that offer the most flights from their home airport and on which the traveler probably has lots of frequent-flier miles,” said Philip A. Baggaley, managing director at Standard & Poor’s Global.

Jan K. Brueckner, a UC Irvine economics professor, added that the U.S. economy remains strong and “people don't have any choice besides the airlines if they need to get to a faraway place.”

hugo.martin@latimes.com

To read more about the travel and tourism industries, follow @hugomartin on Twitter.

Copyright © 2017, Los Angeles Times
EDITION: California | U.S. & World
79°