Tariff uncertainty is rippling through industries, and the travel sector is no exception. Steve Trent, travel analyst, Citi, joined TheStreet to discuss how tariffs may drive up the cost of travel.
Related: White House hits back at countries warning against U.S. travel
Full Video Transcript Below:
STEVE TRENT: I think there are some potential factors that are very hard to anticipate today. But on a basic level individuals might be reluctant to plan discretionary spending. Companies and investors might have poor visibility in terms of their own investment plans for the year. So the latter factors, for example, could delay business travel or reduce the demand altogether. The tariffs themselves. It’s still a little bit unknown what impact we’re going to have on airline seat mile costs with respect to the procurement of equipment and maintenance. So on that level, we could see higher costs start to seep through into earnings results, at least over the short term. Certainly those are the ones I would call out and maybe other subtle effects that are harder to call out, including the extent to which U.S. consumers might be reluctant to do overseas trips.
Regarding whether consumers should think about tariffs making travel more expensive, that is absolutely a risk. So, for example, if the tariffs do put additional pressure on aerospace supply chains, that will increase equipment cost, that could also worsen the scarcity of new equipment per capita. So with less capacity coming through, that indeed could get rolled into price point, especially for the network airlines. And that’s something at this juncture, I would say is a key watch item.
