Insights

Airline Stocks Could Benefit From New Biometric Technologies

Airline Stocks Could Benefit From New Biometric Technologies

Ready for a smoother airport experience from check-in to boarding? Look no further than Terminal F at Hartsfield-Jackson Atlanta International Airport (ATL), home to Delta Airlines. Beginning later this year, Delta will launch the first biometric terminal in the United States, using facial recognition technology to reduce wait times for customers flying direct to an international destination. This innovation of the airport experience could potentially lead to a boost in airline stock prices driven by increased passenger satisfaction and travel demand.

Delta has partnered with U.S. Customs and Border Protection (CBP), Transportation Security Administration (TSA) and ATL to implement biometric technology at all checkpoints through the terminal. Facial recognition software, pulling from the database of passport photos, will be used for checking-in at self-service kiosks, dropping checked baggage and identifying passengers at TSA checkpoints. It will also be available when boarding flights and passing through CBP processing for international travelers arriving into the U.S.

Travelers begin by entering their passport information online when checking in for their flight. Once they arrive at the airport they simply look at the screen on the self-serve kiosks to verify their identity. By using facial recognition to pass through checkpoints, it reduces wait times in lines as passengers no longer need to present their passports or boarding passes.

The terminal launching marks a big step forward in the adoption of biometric technologies, as Delta is one of the largest domestic carriers and ATL is the world’s busiest airport in terms of passenger traffic. After initial testing, the airline estimates that passengers will save nine minutes throughout the journey. This isn’t the first area of operation that Delta has tested the use of biometric technologies. The company also allows its Delta Sky Club members to enter club locations by using their fingerprints to check in.

Airline Innovation Could Potentially Lead to Higher Share Prices

When TSA PreCheck became available to the public in December 2013 and made a widespread rollout in 2014-2015, it coincided with major airlines taking off, as seen in the chart below. By reducing wait times at airport security check points, TSA PreCheck led to increased passenger satisfaction, which coincided with higher travel demand. International Air Transport Association (IATA) research shows that the number of passengers worldwide increased every year from 2013 to 2017, from 3.1 billion to 4.1 billion.

Airlines Stocks Rose After TSA PreCheck Wide rollout in 2013

Similarly, the widespread adoption of biometric technologies throughout airports could lead to another jump in passenger satisfaction over the next several years. Delta is currently the second highest rated traditional airline, according to the J.D. Power 2018 North America Airline Satisfaction study, and reports that customers have responded positively so far to tests of the new biometric airport experience.

Airports and Airlines Globally Adopting Biometric Technologies

It’s not just Delta implementing these new technologies. According to SITA, an information technology company supporting the air transport industry, 63 percent of airports and 43 percent of airlines plan to invest in facial recognition, fingerprint scanning and biometric ID management solutions by 2020. British Airways launched an initiative earlier this year to introduce biometric technologies on flights between Orlando and London Gatwick, after experimenting with biometric “e-Gates” at Los Angeles International Airport (LAX) beginning in November 2017. The airline reports that boarding times have been cut significantly with the ability to board more than 400 customers in only 22 minutes.

How to Invest in Delta and Other Top Carriers

Delta is the third largest holding in the U.S. Global Investors Jets ETF (JETS), the only airline-focused exchange-traded fund on the market today. Along with Delta, other top domestic carriers, Southwest, United and American Airlines, make up close to 50 percent of JETS’ holdings, as of the most recent quarter end.

JETS was up 14.60 percent (NAV) for the one-year period as of June 30, 2018. Learn more about the fund’s performance by clicking here.

EXPLORE JETS TODAY!

 

 

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. For performance data current to the most recent month-end please visit www.usglobaletfs.com.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

The J.D. Power North America Airline Satisfaction Study measures satisfaction with the entire air travel experience, from reservation to baggage retrieval, based on a recent flight experience. The annual study evaluates two market segments, low-cost carriers and traditional network carriers, and provides a competitive benchmark to measure customer advocacy and loyalty; identify improvement initiatives; and compare airline performance.