As Yahoo Finance's Travel Guide for 2024 continues, Yahoo Finance's Pras Subramanian breaks down the three key developments in the airline sector.

Boeing (BA) is facing renewed scrutiny over the safety of its 737 Max aircraft after a January incident on an Alaskan Airlines flight. The Federal Aviation Association has described Boeing's safety culture as "inadequate and confusing," coming after the FAA increased oversight of the plane manufacturer.

With spring break approaching, domestic airfares are down 11% compared to pre-pandemic 2019 levels and 2% year-over-year, according to a Hopper report on spring travel prices.

Finally, air travel in China is expected to rebound in 2024, with analysts predicting it will recover to around 80% of pre-pandemic levels.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

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BRAD SMITH: Is 2024 set to be the year airline stocks get grounded? Fuel costs, consolidation, and new routes are all at the center of the conversation. Boeing recently made headlines again, bringing the question of air safety back to the fore. Then, there are regular concerns for the sector, from geopolitical instability to the level of demand from the world's second-biggest economy.

There are bright spots amid the risks, of course. Some major airports are upgrading, and the expectations for demand seem to only climb higher. So how are you spending?

Where are you going? And how does the sector perform from here? Yahoo Finance's Travel Guide 2024, Industry Insights has your captain speaking and asking the question, what's next for airlines?

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What is next indeed. We're going into the three things that consumers should be watching in the airline space this year. Joining now as part of Yahoo Finance's Travel Guide 2024, Industry Insights, our very own Pras Subramanian. Pras, we've got some more bad news for Boeing yesterday. We don't have it, but we got it from them.

PRAS SUBRAMANIAN: You know, the topic on everyone's mind is Boeing, right? And a new FAA report on Boeing's safety culture came out and they said, quote, they found, "Gaps in Boeing's safety journey," and described the safety culture as inadequate and confusing. Not all employees understood the reporting process for reporting problems.

There was retaliation for workers who spoke up in some instances. And this report was actually written before the Alaska Airlines blowout. So, it sort of is indicating there's still more issues that Boeing needs to deal with, more work to do in the future for them.

SEANA SMITH: Pras, a lot of concern about Boeing planes being grounded for some time is how that's going to impact the supply that's out there, how that could ultimately impact airfare prices. What have we seen so far? And what are we expecting to see as we head into the very busy travel season?

PRAS SUBRAMANIAN: Yeah, you know, when some of those 787-- 737 MAX 9s were grounded, we saw some disruptions there and some travel issues there, and probably some price hikes because of planes taking off out of supply. But according to Hopper, they're seeing that fares are actually, for the spring travel, boomed down 2% compared to last year and a whopping 11% compared to 2019 pre-pandemic levels.

For European long-haul flights, down 7% compared to last year and 8% compared to pre-pandemic. And they think that in the next six months, domestic flights will stay below 2023 trends and also below the pre-pandemic kind of high there. So, good news for travelers there from a air-fare point of view.

BRAD SMITH: And one of the other things that we've heard from CEOs this earnings season on the airline front is about the international travel demand that they're seeing right now, and specifically China's travel rebound. Can we expect that to pick up this year?

PRAS SUBRAMANIAN: You know, they were later than most other countries in opening up and returning to travel. And many of the travel industry expecting a China boom to launch that. And we're seeing that. Chinese authorities anticipate air travel to recover there.

HSBC in a note about Asia said that China's outbound travel to Southeast Asia is booming because there's visa-free travel there that's helping there. Despite macro headwinds, they say, "We believe Chinese citizens will still be willing to spend on travel-related experiences." Also, JPM with the note out talking about how returning travel will help Macau in gaming, so that'll help these hospitality and casino operators in Macau, too.