Industry expert: Ukraine war could be a boon for domestic airlines

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The Ukraine war will likely be a bane for the big cap U.S. air carriers with a focus on “international” but it could very well be a boon for their domestic peers, says former Spirit Airlines’ CEO Ben Baldanza.

Baldanza’s remarks on CNBC’s ‘Squawk Box’

The full-service airlines were expecting a strong summer this year on transatlantic travel, now that COVID restrictions have eased. The geopolitical tensions, however, leaves that optimism hanging again. On CNBC’s “Squawk Box”, Baldanza said:

Anyone going to Europe this summer has to think about what happens if this war exacerbates. Am I going to be safe? That will be harmful for the Americans, Uniteds, Deltas, etc. But it’ll help low-cost airlines that fly either exclusively within the U.S. or to the Caribbean or South America.

The U.S. Global Jets ETF has dropped 15% in less than a month due to the Russia-Ukraine conflict.

Ukraine war fuels uncertainty for international travel

According to Baldanza, the Ukraine war fuels uncertainty related to international travel and that leaves domestic and related options as a natural alternative for Americans looking forward to a vacation in the summer.

“People hate uncertainty. Would you plan your family vacation to Italy or Poland or Turkey or a place like that when you aren’t sure if you’ll be able to take it? You’re just going to say I’m not; I’m just going to go elsewhere.”

Also on Thursday, the airline software giant, Sabre Corp, terminated its global distribution agreement with Russia’s Aeroflot.

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