We've talked a lot over the years you and I about the luxury play when it comes to airlines, how they are seeking perhaps a higher income consumer. We are just talking with Brett Ryan about that here with us on set. Can these airlines continue to rely on higher income consumers to prop up their profits in this macro environment?

Yes, so I think the answer is yes, certain airlines can still count on the high-end consumer to prop up earnings. It's going to be the big full service: United, Delta, and American. Uh look, there's a lot of competition I think for the uh for the base basic economy, uh probably even premium economy travelers. So I think there's probably too much capacity in the market uh for those that the number of uh those travelers that are in this space. And so I would expect some discounting to fill airplanes. So I think the more you're focused on just premium economy and basic economy as an airline, the more the more difficult it's going to be this summer for you to make money.

I'm curious, Josh, what about declining oil prices, that dynamic oil here at at 61. How how much of a tailwind is that for the industry?

Yeah, look it it helps, right? So, uh you know, I think we were doing some math on this, you know, recently and look, I mean, you know, uh fuel prices are uh 20 to 30% of an airline's cost basis. So, you know, if you if they're down 10% or something like that, you're going to save a couple points on cost, right, two percent of cost. It's just not a lot. I don't think you can uh cut fares enough given that extra wiggle room you got from fuel in order to make a large difference. It will help, but really what we're still seeing is an industry where in 2Q and 3Q, based on consensus, not even my numbers but based on consensus, uh expectations are for lower EBITDA, earnings before interest, taxes, depreciation, and rent, which is typically how we measure, and lower margins, lower EBITDA margins. So not going to help enough.

Okay, so not going to help enough. What do you think moves the needle then? I know you sent over in your notes some areas where we could see airlines trying to be competitive when it comes to pricing. If they cut costs on, say, domestic flights, is that something that could be a little bit more impactful than lower oil?

Well, uh so I mean I think that's going to be what's driving the earnings number, right? Domestic business is the largest business for all airlines. Uh and I think the discounting they have to do in domestic to fill airplanes, because you just can't fly, you know, aircraft at 60 or 70% full, you'll never make money that way. So you got to discount them to get them up into the 80s plus percent. I think that discounting is what's going to hurt earnings. We still see international as being relatively strong for the summer season. I think really you get a pretty long booking curve for folks going international. So, uh you know, right now the the euro is sort of working against that traveler, but they didn't see that in the beginning of the year. And so I would still think demand is pretty robust across the Atlantic, at least for the first half of summer and that will be a nice support for earnings. I think we're going to see whether anybody's starting to change their mind on Europe. It's been very US point of sale. We'll see if everybody's starting to change their mind as we get into 3Q. My guess is you could find some. It may not be enough to to create a lot of softness to Europe. So I think that's still a strength this summer and that's what's part of the tailwind for United, American, and Delta.