Business

Mercedes-Benz and Microsoft are partnering to test in-car ChatGPT, the companies announced Thursday.
Mercedes said an optional beta program for U.S. customers will begin Friday.
Mercedes will consider further integration of the technology.

The Mercedes-Benz EQS SUV.
Mercedes-Benz

Mercedes-Benz and Microsoft are partnering to test in-car ChatGPT artificial intelligence, available to more than 900,000 vehicles in the U.S., the companies announced Thursday.
The luxury automaker said the emerging technology will be used for audio requests through its Hey Mercedes voice assistant, which is expected to greatly expand the system’s capabilities. It is the first implementation of ChatGPT in a vehicle, according to a Microsoft spokesperson.

Mercedes said an optional beta program for U.S. customers will begin Friday. Customers can enroll via the company’s app, called Mercedes me, or directly from the vehicle using the voice command, “Hey Mercedes, I want to join the beta program.”
“While most voice assistants are limited to predefined tasks and responses, ChatGPT leverages a large language model to greatly improve natural language understanding and expand the topics to which it can respond,” the carmaker said in a release.
Similar to other industries, the potential applications of ChatGPT in the automotive industry have emerged as a growing discussion. While some, such as General Motors, say their autonomous vehicles already utilize advanced AI, or machine learning, the Mercedes partnership marks one of the first specific-use cases for ChatGPT.
GM earlier this year said it was exploring use cases for ChatGPT in its vehicles as part of a broader collaboration with Microsoft, an investor in OpenAI, which created the technology.

Eric Boyd, corporate vice president of Microsoft’s AI platform, said the new integration will increase voice commands and interaction, task capabilities and allow follow-up questions, in addition to other things.

“Unlike standard voice assistants that often require specific commands, ChatGPT excels at handling follow-up questions and maintaining contextual understanding. Drivers can ask complex queries or engage in multi-turn conversations, receiving detailed and relevant responses from the voice assistant,” Boyd wrote in a blog post.
Based on the findings of the three-month beta program and customer feedback, Mercedes will consider further integration of the technology, according to the companies. More

Toyota’s stock is having its best week since 2009, following the company disclosing plans for its next-generation electric vehicles and shareholders voting in favor of new leadership.
Shares of Toyota on the New York Stock Exchange hit a new 52-week high Thursday of more than $169 per share.
If shares can retain their current momentum, it would be the stock’s best week since April 2009, when it increased 14.5%.

Akio Toyoda, Chairman of Toyota Motor Corp.
Yoshikazu Tsuno | Gamma-rapho | Getty Images

DETROIT – Toyota Motor’s stock is having its best week since 2009 following the company disclosing plans for its next-generation electric vehicles and shareholders voting in favor of its new leadership, including former CEO Akio Toyoda as chairman.
Shares of Toyota on the New York Stock Exchange on Thursday achieved a new 52-week high before closing at $168.18 per share, up 1.6% during intraday trading and roughly 13% this week.

If shares can retain their current momentum, it would be the stock’s best week since April 2009 when they increased 14.5%. It would also mark only the third double-digit weekly gain in more than two decades.
The notable increase in the relatively mundane stock follows additional details about the company’s EV strategy, which has previously been criticized by some for not being aggressive enough.
Ahead of its annual meeting Wednesday, Toyota outlined plans for a new generation of EVs to rival industry leaders Tesla and China-based BYD. The company said it plans to launch its next-generation EVs starting in 2026, including vehicles with highly touted “solid-state batteries” by 2027 or 2028.
Solid-state batteries can be lighter, with greater energy density and provide more range at a lower cost than today’s EVs with lithium-ion batteries.

People arrive to attend an annual shareholders’ meeting for Toyota Motor in the city of Toyota, Aichi Prefecture on June 14, 2023. Toyota is under pressure from large institutional investors for chairman Akio Toyoda to step down over his lukewarm embrace of electric vehicles.
Str | Afp | Getty Images

Takero Kato, president of BEV Factory, said that Toyota is targeting a driving range of 1,000 kilometers (620 miles) for its EVs. BEV Factory aims to produce about 1.7 million vehicles by 2030, he said.

“Proactive disclosure of a new tech strategy featuring next-gen batteries and giga casting delivered a riposte to the view that it is lagging in BEVs. We await quantitative disclosure on BEV profit ahead,” Morgan Stanley analyst Shinji Kakiuchi said Wednesday in an investor note.
Following the announcements, Toyota shareholders Wednesday aligned their voting with company recommendations, including leadership approval and voting down a shareholder proposal requiring Toyota to review its climate-related lobbying activities.
Shareholders also approved the company’s new leadership and board, including the appointment of CEO Koji Sato as a director and Toyoda – grandson of automaker’s founder – as chairman.
Shares of Toyota on the NYSE are up about 23% this year, as the auto industry continues to recover from the coronavirus pandemic and supply chain issues that led to record low vehicle inventory levels.
Toyota’s gains put it in the middle of Japanese automaker stocks, ahead or in-line with the Detroit automakers and behind shares of Tesla, which have more than doubled in 2023.
Here’s how other automaker stocks have performed this year compared to Toyota:

Auto stocks so far this year

*Shares of these companies are traded in the U.S. as American depositary receipts. More

Cava Group made its public market debut on the New York Stock Exchange under the ticker “CAVA.”
The company sold 14.4 million shares, raising nearly $318 million and valuing the restaurant chain at roughly $2.45 billion.
Cava’s debut could inspire other restaurant chains to follow its lead, helping to snap the IPO market’s drought.

A banner for the Mediterranean restaurant chain Cava is displayed outside of the New York Stock Exchange (NYSE) as the company goes public on June 15, 2023 in New York City.
Spencer Platt | Getty Images

Shares of Mediterranean restaurant chain Cava soared as much as 117% in its market debut Thursday.
The company’s stock closed at $43.78 per share, up from its opening trade of $42 per share. Its closing price gives it a market value of $4.88 billion and makes it the top-performing IPO this year for companies valued above $500 million.

Cava Group priced its IPO at $22 per share on Wednesday, above the expected range of $19 to $20. The company sold 14.4 million shares, raising nearly $318 million and initially valuing the restaurant chain at roughly $2.45 billion.
The stock trades on the New York Stock Exchange under the ticker symbol “CAVA.”

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Although it was founded in 2006, Cava opened its first fast-casual location in 2011, modeling its build-your-own Mediterranean meals after the formula made popular by Chipotle Mexican Grill. The chain built a customer base by introducing some eaters to ingredients like harissa and tahini and positioning itself as a healthy and convenient option. The company also sells its dips, spreads and salad dressings in grocery stores.
Cava acquired Zoes Kitchen in 2018, taking the rival Mediterranean chain private for $300 million. It’s spent the last five years converting Zoes Kitchen locations into Cava restaurants, contributing to its footprint of 263 locations as of April 16.
Last year, Cava’s net sales climbed to $564.1 million, 12.8% higher than the year earlier.

“You’re seeing the inflection point in the business, and all of that robust structure we’ve invested in, the restaurant growth, starting to take hold and drive tailwinds to the business,” CEO Brett Schulman said on CNBC’s “Squawk on the Street.”
But its losses also widened from $37.4 million in 2021 to $59 million in 2022.Still, industry experts say that the chain has demonstrated a clear path to profitability, making it more attractive for investors looking for growth stocks. In the first quarter, it reported a net loss of $2.1 million, narrower than its $20 million net loss in the year-ago period.
The restaurant company plans to use the proceeds from its IPO for new location openings and general corporate purposes.
Cava adds to the growing number of publicly traded fast-casual chains. Sector leader Chipotle made its public market debut back in 2006 and has seen its market value grow to $56.9 billion.
More recently, salad chain Sweetgreen went public in November 2021. It now has a market value of $1.2 billion. Investors have dinged the stock for the company’s lack of profit, although shares have climbed more than 25% this year.
Cava’s debut could inspire other restaurant chains to follow its lead, helping to snap the IPO market’s drought. Brazilian steakhouse Fogo De Chao and Korean barbecue chain Gen Restaurant Group have both filed regulatory paperwork confidentially, while both Panera Bread and Fat Brands’ Twin Peaks have shared an intent to issue an initial public offering in the near future. More

“Junk fees” are extra costs tacked on at the end of purchases, often for concert tickets, resorts and rentals.
President Joe Biden has made ending the practice a priority. Live Nation and SeatGeek agreed to commit to show all fees up front for ticket purchases.
The issue reached a boiling point recently when customers were faced with exorbitantly high prices for Taylor Swift’s Eras tour tickets.

(L to R) Tobi Parks, CEO of xBk, US President Joe Biden and Lael Brainard, assistant to the President and director of the National Economic Council participate in an event about protecting consumers, in the East Room of the White House in Washington, DC, on June 15, 2023. 
Andrew Caballero-Reynolds | AFP | Getty Images

WASHINGTON — Several large companies, including Ticketmaster parent Live Nation, are vowing to end surprise “junk fees” following a pressure campaign from the Biden administration.
“Junk fees” are extra costs tacked on at the end of purchases, often for concert tickets, resorts and rentals. President Joe Biden has made ending the practice a priority and invited representatives from Live Nation, Airbnb, SeatGeek and others to meet with him Thursday.

Both Live Nation and SeatGeek agreed in advance of the meeting to commit to show all fees up front for ticket purchases, the White House said. Iowa venue xBk is expected to as well. Airbnb in December began including all fees in the final price after calls from the White House to do so.
“Today’s voluntary actions demonstrate that companies both big and small recognize the importance of providing consumers with honest, up-front all-in pricing, rather than tricking them with surprise fees at the end of checkout,” the White House said in a statement. “It is also just a first step towards addressing junk fees in the economy.”
“This is a win for consumers in my view, and proof that our crackdown on junk fees had real momentum,” Biden said Thursday following the meeting, adding that there is more to do.
Biden first began his campaign against “junk fees” nine months ago and included calls for private companies to do so in his State of the Union address this year. The issue reached a boiling point in November, when customers were faced with exorbitantly high prices for Taylor Swift’s Eras tour tickets.
“President Biden has been working to lower costs for hardworking families by bringing down inflation, capping insulin prices for seniors, and eliminating hidden junk fees,” National Economic Council director Lael Brainard said in a statement. “More companies are heeding the president’s call so that Americans know what they’re paying for up front and can save money as a result.”

Brett Goldberg, co-CEO of TickPick, said in an interview after the meeting he thought it was productive but worried it wouldn’t go far enough. TickPick from its inception has used all-in pricing, meaning no surprise junk fees.
“There’s just so much negative sentiment around ticketing, and even though it doesn’t solve all the problems, the vast majority of what people talk about is the hidden fees,” Goldberg said. “Yes there’s the cost component, but it’s the additional slap in the face when you’re getting ready to pull the trigger on expensive tickets and then it ends up being 20 to 30% more.” More

Airlines are offering nonstop flights that can top 18 hours
The Covid pandemic grounded a lot of long-haul international service.
Qantas is studying a nonstop from New York to Sydney that could take around 20 hours.

The first class suite on Qantas’ ultra-long-range A350-1000.
Courtesy: Qantas

Long flights are making a comeback.
It is one of the clearest signs yet that airlines are betting that the rebound of international travel, devastated in the Covid pandemic, will continue to grow.

On Wednesday, Qantas launched service between New York and Sydney with a stop in Auckland, New Zealand, on Boeing 787 Dreamliners, instead of a previous stop in Los Angeles. But the Australian carrier is focusing on even longer routes: Nonstop flights from Sydney to New York and London. Flights could clock in at around 20 hours, enough time to watch most of the Star Wars Skywalker Saga.
“You don’t have to take your bags off, you don’t have to transfer, you don’t have a chance of misconnecting,” Qantas CEO Alan Joyce told CNBC on Thursday at a showcase of the airline’s new cabins in New York. The airline estimates the new routes could reduce travel time by more than three hours compared with flights with stops in other airports.
For eight years, Qantas has been working with sleep scientists who have studied passenger moods, sleep patterns and food intake in hopes of limiting the impacts of jet lag on super-long flights, with test runs in 2019. They found that delaying meal service and keeping passengers awake longer with cabin lights help to fight the impacts of jet lag when they arrive at their destination.
Qantas is planning to operate the new nonstops on ultra-long-range Airbus A350-1000 planes starting as soon as late 2025. They will seat 238 passengers, far fewer than the more than 350 passengers that standard versions of the planes can fit. Qantas limited the number of people on board to fit more spacious seating and to account for weight and the plane’s range.
The airline has ordered 12 of the special planes.

“Qantas is the only airline wanting to do this. Because from Australia, we’re so far away from everywhere that we can justify at least 12 [of these] aircraft,” Joyce said.

Courtesy: Qantas

The planes will be outfitted with six enclosed, first-class suites that include a table for two, a reclining chair, a 32-inch touch-screen television and a 2-meter (more than 6.5-foot) flatbed. It will also have 52 business-class suites with lie-flat beds and 40 premium economy seats, as well as 140 seats in economy class.
They will also have what Qantas calls a “Wellbeing Zone” that has handles for stretching, on-screen exercise guides and refreshments. Wi-Fi will be complimentary, Qantas said.
Joyce said the airline’s international capacity is back to 85% of pre-pandemic levels and that he expects that to fully recover next March.

Passengers onboard QF7879 are taken through exercise classes during the flight from London to Sydney direct on November 15, 2019 in Sydney, Australia.
James D. Morgan | Getty Images

Yet even though ultra-long-haul flights are technically possible thanks to more efficient engines and aircraft, they face other challenges.
“There’s technical feasibility, and then there’s economic feasibility,” said Robert Mann, an airline industry analyst and former airline executive.
Singapore Airlines, for example, launched a nonstop flight from Newark, New Jersey, to Singapore that took about 18 hours (times vary due to winds and other factors) in 2004, a bet on business travel and that customers between the two destinations would pay to avoid connecting in another airport. In 2008, it offered reconfigured cabins that solely featured 100 business class seats on the A340-500.
But it discontinued the flight in 2013 as the carrier got rid of the fuel-guzzling, four-engine aircraft. It relaunched it in 2018 with a mix of business-class and premium-economy seats, pausing it during the pandemic and relaunching it last year.
In November 2020, the carrier introduced what is currently the world’s longest flight, from New York’s John F. Kennedy International Airport to Singapore.
Here is a look at the world’s longest flights by distance, according to airline data firm OAG: More

A sale pending sign is posted in front of home for sale in Greenbrae, California.
Justin Sullivan | Getty Images

CNBC’s Investing in Space newsletter offers a view into the business of space exploration and privatization, delivered straight to your inbox. CNBC’s Michael Sheetz reports and curates the latest news, investor updates and exclusive interviews on the most important companies reaching new heights. Sign up to receive future editions.

Overview: M&A underway

The space sector has seen a variety of mergers and acquisitions since the start of the year, but the deal-making is only heating up.

This week I spoke to bankers, private equity partners and investors to get a candid health check on M&A activity in the industry, and the consensus was fairly unanimous. As one financier said: “The dominoes are starting to fall.”
“This is a normal market cycle,” a second financier said, and the pendulum is swinging toward a shakeout: “A lot of those weaker companies fail, and there’s a lot of consolidation.”
“We’re early into the process of reckoning actual demand versus hype,” a third said.
Most people I talked to expect that – absent an unexpected and dramatic swing in macroeconomic conditions – this period of companies selling or failing will last the next 12 months. CNBC agreed to keep their identities anonymous so they could talk freely about non-public discussions and sentiments. 
“A lot of these sort of startup companies that have been around for the last few years will see the wall in front of them and likely sell ahead of that,” another financier said.

On the top end of the M&A market, multiple bankers told me that United Launch Alliance — the joint venture between Lockheed Martin and Boeing — continues to be shopped around, as has been reported, while packaging giant Ball is looking to sell off its aerospace subsidiary. ULA referred my request for comment on the sale process to Boeing and Lockheed. A Ball Aerospace spokesperson declined to comment.
Meanwhile, one financier told me even Boeing is exploring options for its space business, and “everything’s on the table.” The person, who had knowledge of the conversations, told me no “hard decisions” have been made yet regarding what the company may do with its space portfolio, but it could potentially divest or sell its satellite manufacturing unit. Boeing did not respond to my request for comment.
An important nuance emphasized by many during my conversations: these deals, whether they’re worth millions or billions, are not all equal. The markets and underlying technologies of space companies are often very different, and the reasons why one company sells or fails are often just as different from that of another. 
Likewise for buyers, who may go after a deal because they’re chasing a deep discount, looking to quickly add talent in a key area, adding complementary services or technology, or any other number of incentives.
“This is an incredible opportunity … if you’ve been doing all the hard work through the market frenzy and you’ve been building a business on sound unit economics … now is the time to move,” one person told me. “You can really clean up.”

What’s up

Ursa Major and Orbit Fab conduct layoffs, as the pair of Colorado companies adapt to the new normal of a tight funding environment. Ursa Major was hit particularly hard, letting go of about 27% of its employees. – CNBC
Space Force assigns 12 missions to SpaceX and ULA: Under the previously awarded NSSL Phase 2 contract, the companies each were given six assignments. The average price of SpaceX’s missions is $90.2 million per launch, while ULA’s average out to $105.5 million per launch. – Read more
ULA’s debut Vulcan launch likely to slip to Q4: The company is making modifications to the upper stage of the rocket after an explosion during testing in March. – Ars Technica
SpaceX launches 40th and 41st missions of the year, including the Transporter-8 rideshare mission that carried 72 satellites for multiple companies. The mission also marked the company’s 200th successful landing of an orbital rocket booster. – Read more
Stoke Space tests rocket direction control, as the company continues to pursue a way to develop a fully reusable rocket. – Stoke

Industry maneuvers

SAIC awarded $64 million contract by Pentagon’s Space Development Agency, to develop and maintain a virtual “factory” in orbit for software applications of the SDA’s low Earth orbit constellation. – SpaceNews
BlackSky wins ‘more than’ $30 million contract, to provide satellite imagery services to an unnamed international military customer for multiple years. – BlackSky
NASA awards SpaceX with cube satellite launch contract, for the company to launch four of the agency’s cubesats no earlier than 2025 on a Falcon 9 rocket. – NASA
Tomorrow.io raises $87 million to build out its weather and climate satellite constellation, in a round led by Activate Capital and joined by  RTX Ventures, Seraphim Space, Chemonics, SquarePeg Capital, Canaan, ClearVision, JetBlue Ventures and Pitango. – SpaceNews

Market movers

Planet lowers annual revenue guidance. It also increased its expected annual loss forecast, as the company reported fiscal first-quarter results. Planet CFO and COO Ashley Johnson emphasized the “challenging macro environment” and said the company remains “focused on the path to profitability.” – CNBC
Astra shareholders approve plan for reverse stock split, giving the company the option to perform a split in the range of 1-for-5 to 1-for-15. – Astra

Boldly going

David Anderman joins Surf Air, with the former top SpaceX lawyer seeking to help take the aviation company public as its Chief Legal Officer. – CNBC
Steve Collar stepping down as CEO of SES, after more than 20 years at the Luxembourg-based satellite communications company. At the end of June, SES CTO Ruy Pinto will assume the role of CEO, with the company searching for a permanent successor. – SES
Rick Baldridge retiring from role as Viasat Vice Chairman, after leading the Inmarsat acquisition process. Baldridge joined Viasat in 1999, serving in roles including COO and CEO. – Viasat
Tony Gingiss joins Terran Orbital as COO, having previously served as the COO of Virgin Orbit, with prior leadership roles at Airbus OneWeb Satellites as well as Boeing’s satellite unit. – Terran Orbital
Ron Garan named CEO of ispace’s U.S. business: Garan, who flew as NASA astronaut on Space Shuttle and previously was an Air Force fighter pilot, will lead the Japanese company’s office in Denver. – ispace
Curt Blake joins law firm Wilson Sonsini, to lead a new space-focused industry group. Blake was the cofounder and CEO of Spaceflight, which was acquired recently by Firefly Aerospace. – Wilson Sonsini
Kerry Wisnosky hired as CEO of Quantum Space, joining the spacecraft transportation and services startup, with his prior company Millennium Engineering and Integration having merged with QuantiTech in 2021.  – Quantum Space

On the horizon

June 18: SpaceX’s Falcon 9 launches Satria communications satellite from Florida.
June 19-25: Paris Air Show
June 21: ULA’s Delta IV Heavy launches NROL-68 satellite from Florida. More

More than 50 House Democrats are calling on Walmart, Costco, Kroger, Safeway and Health Mart to make a public commitment to sell the abortion pill mifepristone.
The companies have been silent for months on whether they will get certified to sell the medication.
CVS and Walgreens said in January that they will get certified to sell mifepristone, sparking backlash from Republican attorneys general.
Mifepristone faces an uncertain future as an appeals court weighs a lawsuit that seeks to pull the medication from the U.S. market.

In this photo illustration, packages of Mifepristone tablets are displayed at a family planning clinic on April 13, 2023 in Rockville, Maryland. 
Anna Moneymaker | Getty Images

House Democrats on Thursday called on Walmart, Costco, Kroger, Safeway and Health Mart to publicly commit to sell the prescription abortion pill mifepristone at their retail pharmacies.
Pending lawsuits have jeopardized mifepristone’s approval in the U.S. For now, it is the most common method to terminate a pregnancy in the country.

The five companies have been silent for months on whether they will get certified to sell mifepristone under a Food and Drug Administration program that monitors how the medication is distributed and used by patients.
“It is unconscionable that five of the largest retail pharmacies in the country are refusing to declare whether they will receive certification to provide basic, legal, FDA-approved medication abortion health care for Americans,” Rep. Dan Goldman, D-NY, said in a statement Thursday.
Goldman and Rep. Judy Chu, D-Calif., sent a letter asking the companies’ CEOs to confirm by June 23 whether their pharmacies will get certified to sell the abortion pill.
More than 50 other Democratic lawmakers signed on to the letter.
“Your continued silence is unacceptable as it is misaligned with your publicly stated values in support of equal access to health care and of gender equality,” the lawmakers told the CEOs in the letter.

Democratic governors and senators asked the companies in March whether their pharmacies will get certified to dispense the medication. The companies still have not taken a public position on the issue.
The largest retail pharmacies in the U.S. have found themselves increasingly caught in the middle of the national battle over abortion access, which was set in motion by the Supreme Court’s decision to overturn Roe v. Wade last June. More than a dozen states have banned abortion since the high court overturned the landmark 1973 decision that protected access to the procedure as a right under the U.S. Constitution.

As conservative states implemented abortion bans after the fall of Roe, the FDA sought in January to expand access to mifepristone by allowing retail pharmacies for the first time to dispense the medication if they get certified.
The agency also permanently allowed women to obtain the pill by mail.
CVS and Walgreens, the two largest pharmacy chains in the U.S., said shortly after the FDA decision that they would get certified to sell mifepristone where it is legal to dispense the medication.
The companies soon faced a backlash from Republican state attorneys general, who fear easier access to mifepristone particularly by mail will undermine their states’ restrictive abortion laws or outright bans. 
The GOP attorneys general warned the CEOs of CVS and Walgreens that they would take legal action if the companies sold the pill in their states. Walgreens confirmed to the attorneys general that the company would not sell mifepristone in their states.
Walgreens then got smacked by California Gov. Gavin Newsom. The liberal governor refused to renew a state contract with Walgreens over its move.
Mifepristone’s status as a FDA-approved medication faces a deeply uncertain future, even in states where abortion remains legal.
A group of doctors who oppose abortion sued the FDA last November to pull mifepristone from the U.S. market entirely.
U.S. Judge Matthew Kacsmaryk in the Northern District of Texas ruled in the antiabortion doctors favor in April and suspended the FDA approval. The Supreme Court intervened in the case and preserved access to mifepristone as the litigation plays out.
A panel of three judges at U.S. 5th Circuit Court of Appeals now has the case and could issue a ruling at any time. The appeals court judges appeared skeptical of the Justice Department’s defense of mifepristone during oral arguments in May.
The case will likely end up before the Supreme Court again, particularly if the appeals court rules against mifepristone.

CNBC Health & Science

Read CNBC’s latest health coverage: More

REVENGE HOLIDAYS are in full swing and the travel industry is cashing in. After a rocky few years, the urge to splurge on airline tickets and hotels is set to bring in bumper earnings. Tour operators are inundated with bookings; hotel chains are raking in record profits. EasyJet has raised its earnings forecasts twice this year; IAG and Ryanair have both returned to profit for the first time since the start of the pandemic, and Singapore Airlines is handing out some of its record profits as bonuses worth eight months’ salary. With air fares rising faster than inflation, global airline bosses now expect $9.8bn in net income this year, more than double the amount initially forecast, according to the International Air Transport Association, an industry body. The holiday boom has lifted the outlook for international travel. Worldwide tourist arrivals this year are expected to reach up to 95% of pre-pandemic levels, up from 63% in 2022, estimates the UN’s World Tourism Organisation. Share prices of travel companies, which tumbled in early 2022 amid fears of rising inflation and a looming recession, are soaring again (see chart). High prices have not deterred sunseekers so far. “People are prioritising travel over other discretionary spending,” says David Goodger of Oxford Economics, a consultancy. Still flush with cash saved during lockdowns, many are splashing out on holidays, even as they trim spending on clothes or dining out. A few factors will determine how long the good times roll on for. Some have to do with the industry’s supply side: shortages of airport staff, soaring jet-fuel costs and crumbling IT systems, which buckled under the weight of demand last year, leading to hours-long flight delays or cancellations at short notice. A quarter of all flights in America were scrapped or delayed last summer. Such meltdowns erode trust. They are also costly. Southwest Airlines estimates that the cancellation of nearly 17,000 flights in December led it to incur around $800m in losses.A bigger question concerns demand. After a glorious summer, appetite for holidays could come crashing down as fast as it has risen. Although America’s Federal Reserve has paused interest-rate rises, it is expected to lift rates again in coming months. As the Fed and other central banks in rich countries keep fighting stubborn inflation, holidaymakers may eventually throw in the beach towel. Chinese tourists, the third-biggest group after Americans and Germans in 2019, according to Oxford Economics, may not pick up the slack. Since covid restrictions in China were eased last year, nearby destinations such as Macau and Thailand have proved popular. Yet Chinese enthusiasm for far-flung spots remains tepid. Accor, a hotel giant, estimates that around three-quarters of Chinese travellers this year will opt for “staycations” instead. A lull in holidaymaking would be bad news for a heavily indebted industry already facing escalating expenses and recovering from past losses. Airlines alone lost $138bn in 2020. Moody’s, a credit-rating agency, expects their labour costs to increase by nearly a fifth this year. More