We’re already starting to see a substantial rebound in commercial flight demand, driven primarily by leisure travel. According to the Transportation Security Administration (TSA), over 1.57 million passengers were screened at U.S. airports on Sunday April 18. Daily passengers averaged 1.36 million in the seven days through April 18, compared with 97,799 a year earlier.
Following new guidance from the Centers for Disease Control and Prevention (CDC), fully vaccinated people can travel “at low risk to themselves.” What’s more, travelers within the U.S. no longer need to take a COVID-19 test or self-quarantine afterward. The same goes for international travel unless the destination country requires it. This is all very constructive news for travel and hospitality stocks in general, and airline stocks specifically.
The recovery in commercial flight demand is already well underway as the vaccine rollout accelerates. As of April 18, at least half of Americans over age 18 have received at least one vaccine shot, according to the CDC.
Airlines are in a good position to take advantage of what appears to be an upcoming demand boom, with many carriers having already expanded their networks. Starting May 1, Delta Air Lines will begin selling the middle seat for the first time since April 2020, making it the last major U.S. carrier to do so. United will fly three new seasonal routes to Europe starting in July – including Washington to Athens and New jersey to Croatia.
Taking these positive developments into account, a number of analysts have published bullish outlooks on the industry. Morgan Stanley analyst Ravi Shanker said he sees 30% upside potential for select airline stocks in the near term, and 45% gains longer term. “We would not be surprised to see the return of the ‘golden age’ of travel in the 2020s,” he writes, likening today’s situation to the Roaring Twenties and Swinging Sixties.
In the first quarter of 2021, airline stocks soared 28.4%, handily outperforming the market, as measured by the S&P 500. Among the best performing carriers were American Airlines, up 55.5%; JetBlue Airways, up 46.3%; and Alaska Air Group, up 42.5%.
Considering investing in airline stocks after the solid first quarter? Explore the U.S. Global Jets ETF (JETS) – an airline-focused ETF that gives investors exposure to a basket of 39 global stocks.
The NYSE Arca Global Airline Index is a modified equal dollar weighted index designed to measure the performance of highly capitalized and liquid international airline companies. The S&P 500 Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies.