Damo: Consumers' willingness to travel remains resilient North America's aviation industry is “attractive”
The Zhitong Finance App learned that Morgan Stanley recently released a research report on the North American aviation industry, which summarizes key industry trends over the past week, including potential mergers and acquisitions, long-term government strategies, frequent flyer program adjustments, and executive changes, and provides detailed capacity data, consumer surveys, and individual stock investment ratings analysis.
Summary of key news
Potential industry integration: Spirit Airlines and Frontier Airlines (ULCC.US), which are in the bankruptcy phase, are reportedly discussing a potential merger. The deal may have been announced as early as this month, but neither party has publicly commented, the source said. The two companies have been in touch several times since at least 2022, but no agreement has been reached before.
National Strategy Release: The US Department of Transportation (DOT) issued the “2026-2036 National Strategy for Advanced Air Mobility”, which plans to accelerate the development and deployment of advanced air traffic (AAM) technology by coordinating federal, state, local, and tribal government actions. The strategy focuses on the four core areas of safety, security, defense, and economic competitiveness, and sets phased development goals: complete demonstration operation of existing airport infrastructure by 2027, cultivate the domestic supply chain of key technologies such as automation and avionics; expand urban and rural AAM operations in 2030 to promote private investment in vertical take-off and landing airport construction and modernization of low-altitude traffic control systems; and achieve advanced capabilities such as fully automated flight in 2035 to consolidate America's leading position in aviation manufacturing and global aviation trade.
Loyalty program tightened: American Airlines (AAL.US) announced that from mid-December 2025, travelers who purchase basic economy tickets will no longer accumulate AAdvantage miles and elite status points. The move made its basic economy class products more restrictive, on par with rivals such as Delta Air Lines (DAL.US) that have implemented similar policies.
Senior personnel changes: Delta Air Lines President Glen Hauenstein will retire on February 28, 2026. He has been with the company for more than 20 years and has had an important impact on the company's route planning and business strategy. The successor is Joe Esposito, the current senior vice president.
Market and consumer insights
According to OAG data, the capacity plans of major North American carriers for the second quarter of 2026 showed differentiated adjustments: American Airlines' short-haul international flight capacity increased 7.6% year on year; United Airlines (UAL.US) domestic capacity increased 9.0% and short-haul international route capacity increased 1.6% year on year; JetBlue (JBLU.US) short-haul international route capacity increased 11.9% year on year, and long-haul international route capacity increased by 12.2%.
In terms of consumer demand, the AlphaWise survey shows that 58% of consumers plan to travel in the next six months. Although this is a slight decrease from 62% in the same period last year, it is higher than last month's level. The willingness of companies to spend on travel ranked first among all types of travel needs, and the willingness to spend on international travel surpassed domestic travel for the first time. The characteristics of income stratification are obvious. The willingness of consumers with an annual income of 150,000 US dollars or more to travel reached 79%, while the willingness of people with an income of 25,000 to 49,000 US dollars and more to travel increased significantly, indicating that travel demand remains resilient in all income groups.
Investment Views and Individual Stock Ratings
Morgan Stanley maintains an “attractive” industry view of the North American aviation industry. The report updated the stock ratings, target prices, and risk-return analysis of the nine major airlines covered: Alaska Airlines (ALK.US), American Airlines, Delta Air Lines, United Airlines, Southwest Airlines (LUV.US), and Sun Country Airlines (SNCY.US) received “additional” ratings, and Allegiant Travel (ALGT.US), Frontier Airlines, and JetBlue were given “holding” ratings.
The report highlights that Delta is popular for its robust balance sheet and leading customer loyalty programs; United's outstanding performance in terms of execution; and Southwest Airlines' key focus in 2026 is the smooth launch of its new designated seat system.