(Bloomberg) -- Travelers are delaying trips to the US to the end of the year as a direct consequence of the economic uncertainty caused by President Donald Trump’s tariffs, according to Starlux Airlines Co.
“This summer, we see the impact already,” said the airline’s chief executive officer Glenn Chai in an interview with Bloomberg News on Tuesday. “People are feeling uncertain about future economic growth. They are still booking but they postpone to the fourth quarter,” he added, referring to leisure bookings.
The high-end start-up carrier says the disruption to business is a headwind but one that is likely to only be felt short-term as it bets the global dispute over duties will be resolved ahead of next year’s US mid-term elections.
The evolving trade situation only adds to the challenges for the aviation industry emanating from Trump’s White House. Additional difficulties include the administration’s attacks on Harvard University, which have since broadened out to imposing restrictions on international students.
Nevertheless, the Taipei-based airline, which launched amid the Covid-19 pandemic in 2020, has grown rapidly. All of its long-haul flights are to America, which remains a key market, helping the carrier develop a broader appeal to customers including transit travelers.
On average, 70% of Starlux’s flights in business class are via cash bookings, fueled by the strong flow of corporate travel largely underpinned by the semiconductor and broader technology industry, said Chai, speaking at the International Air Transport Association’s annual meeting in New Delhi.
With long-haul flights from Taipei to Los Angeles, Seattle and San Francisco already, the carrier launched its fourth US route to Ontario, California this week. It is planning to start flights to Phoenix early next year to meet the increased travel demand created by Taiwan Semiconductor Manufacturing Co.’s more than $165 billion investment in Arizona.
The next phase of expansion will include an inaugural flight to Europe next year, and at least two more US destinations, with New York and other East Coast routes under consideration. However, getting the necessary new aircraft on-time remains a challenge for the entire aviation industry.
Delivery Delays
The Taiwanese carrier is being forced to dial back its growth expectations this year with Airbus advising it will deliver fewer aircraft to them than promised, and delays on the remaining jets it will produce.
Starlux, which has a fleet of 28 all-Airbus aircraft with new-generation fuel-efficient engines, had planned to grow its capacity by as much as 50% by year end compared to 2024, but that is more likely to be closer to 20% to 30%, said Chai.
Chai said it has three more aircraft to be delivered this year, an A350-1000 and two A330neos joining two A350-900s already delivered, four widebodies short of what it had initially planned to receive. Starlux expects delivery of a dozen Airbus jets in 2026.