With no slack in the system, demand for air travel continues to outpace expectations. Air passenger traffic has grown from approximately 665-677 million in 2000 to 930 million passengers today. Approximately 17.1 million passengers are projected to fly between March 1 and April 30 this year, with Airlines for America estimating roughly 2.8 million passengers in the air every day through the spring travel season. United Airlines CEO Scott Kirby underscored the strength of demand when he announced that March 9th set a new all-time single-day revenue booking record for the carrier – up 36% over the same day in 2025. Delta, American, JetBlue, and Frontier Group also signaled that strong demand is expected to extend well into spring. Global tensions in the Strait of Hormuz and the ongoing Iran-Israel conflict have pushed Brent crude over $100 per barrel. As of late March, jet fuel, which had been forecast in the $2.27–$2.42 per gallon range, is averaging between $3.90 to $4.57 per gallon, roughly double the price of a year ago. Fuel cost escalation will compress airline margins and put pressure on operations (United’s Scott Kirby said the carrier will cut 5% of planned flights as fuel costs surge). Despite struggles to pay TSA agents and disruptions at checkpoints, passenger demand has not softened meaningfully.
New aircraft deliveries continue to lag orders. Lessors with well-maintained, properly configured aircraft are in a strong position. Age, flight cycles, and maintenance status affect valuation, particularly when an airframe is approaching a heavy C-check or an engine is nearing a shop visit. A fresh overhaul or recent engine shop visit improves lease rates and resale values. Cabin configuration and remarketing flexibility also matter as carriers reassess network strategies in the current higher fuel-cost environment. Newer aircraft offer improved fuel burn and lower operating costs, but acquisitions come at a premium to the capital cost of existing equipment.
The Association of American Railroads’ March 6th Rail Industry Overview reported total U.S. carloads averaged 224,737 per week in February 2026 – the strongest February performance since 2019 and up 6.5% over February 2025. For the first two months of the year, carloads totaled 1.76 million, up approximately 92,000 units over the same period last year. Fourteen of the 20 major carload categories posted year-over-year gains in February, led by grain, coal, chemicals, and petroleum products – a broad-based result that reflects underlying economic activity. U.S. intermodal shipments averaged 280,687 units per week in February, the highest ever recorded for that month, and marked the first year-over-year gain for intermodal in six months. The AAR Freight Rail Index, which tracks seasonally adjusted carloads and intermodal shipments in segments most sensitive to broader economic conditions, rose 1.8% in February over January – its third month-to-month increase in the last four months. For rail equipment, these data points support equipment utilization and underpin residual values.
Q4 GDP growth was revised down to 0.7%. February PCE inflation is estimated to have increased 3.0% year over year. Consumer sentiment slipped to 55.5%. March 18th, the Fed held interest rates steady (3.5%-3.75%). Fed policy makers are still expecting a one-quarter-point cut by the end of 2026. With tax cuts supporting investment, the economic backdrop remains strong. Aero demand is holding, and supply remains constrained. For rail, the latest data points to continuing carload freight demand. Both sectors are well-positioned. Portfolio management requires a clear-eyed view of residual values and a readiness to act when uncertainty creates opportunity. Be prepared. Call RESIDCO.
Glenn Davis 312-635-3161
[1] Airlines for America, News Update, February 24, 2026.
[2] March 30, Brent was trading around $107.92 to $108.63 per barrel, West Texas Intermediate at $101.65.
[4] Association of American Railroads, Policy & Economics, Rail Industry Overview, March 6, 2026.
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