Investing.com -- Airline demand and pricing continued to show strength through May 2026, with capacity plans skewed toward reductions as fuel costs remain elevated, according to Bank of America's latest industry analysis.

Pricing remained resilient through the second quarter of 2026. Airline Fare CPI rose 20.7% year-over-year in April, accelerating from March's 14.9% increase, and climbed 6.3% month-over-month. Air Passenger Services PPI was up 11.1% in April, above March's 8.1%, with 2.4% month-over-month growth.

The Airline Reporting Corporation's average ticket price remained up 16.2% in April, stable month-over-month. Aggregated Bank of America debit and credit card spending on airlines accelerated in May to double-digit growth, driven by continued increases in spend per transaction.

Airlines indicated at Bank of America's Industrials, Transportation & Airlines Key Leaders conference last week that demand and pricing remain strong while capacity plans are skewed to the downside. Second-half 2026 plans remain flexible, largely dependent on fuel prices, with oil prices staying above $100 per barrel.

Third quarter 2026 domestic capacity has been reduced by 200 basis points to 1.6% growth since mid-April. Spirit's cessation of operations drove 160 basis points of reductions, while United Airlines cut its growth from 9.4% to 5.2%, removing another 80 basis points. American Airlines remains an outlier with growth still at 9.3%, contributing 190 basis points to industry capacity growth.

Summer capacity is expected to remain flat, with further reductions likely post-summer. September capacity growth of 4.1% remains well above the flat May-August trend, with additional cuts expected in coming weeks.

Outbound US tourism continued to outpace inbound tourism year-to-date. Excluding the Middle East, outbound travel is up 3.7% year-over-year, while inbound is down 3.8%. Airlines indicated they had not seen meaningful World Cup-related bookings impact, though United Airlines noted bookings in North American host cities during the Group Stage are up nearly 20%.