Foreign exchange rates play a significant role in the demand for air travel, both domestically and internationally. While factors like economic growth, real wages, and consumer confidence impact an airline’s success, fuel prices and foreign exchange rates are also crucial considerations.

For airlines like United Airlines, foreign exchange rates can have a direct impact on their ticket prices and overall success. When international visitors pay for goods and services in a different currency, they must exchange their local currency for the country they are visiting. If the value of their local currency declines against the foreign currency, the cost of the trip becomes more expensive, leading to a decrease in travel demand. In order to fill passenger cabins, airlines may have to lower ticket prices.

However, there are some markets, like domestic ones, where exchange rates have a limited impact. For example, Delta Air Lines recently removed a high-yielding transatlantic route and replaced it with a domestic route due to the decline of the US Dollar against the Euro. This demonstrates how exchange rates can influence demand in foreign markets and lead to airlines targeting domestic markets instead.

Additionally, exchange rates have a stronger impact on destinations with strong currencies, such as Europe. As the US Dollar weakens, traveling to these destinations becomes more expensive, resulting in decreased demand. On the other hand, a weaker Dollar can lead to increased demand for travel to the United States from Europeans.

To address the decline of a currency, airlines like United can reduce capacity on routes where the currency’s weakness could significantly impact