Here in the U.S., executives of the biggest airlines are urging the Biden administration to bring an end to Covid-era travel restrictions. In an open letter, the CEOs of American, Delta, United, Southwest and others write that predeparture testing requirements and mask mandates “no longer make sense in the current public health context.”
Indeed, domestic and international traffic is up as passengers’ comfort level with taking a flight is at its highest level since the pandemic began, according to a survey by Evercore ISI. The firm’s sales survey also shows that bookings rose for a ninth straight week as of March 22, with leisure demand driving much of the growth.
International travel continues to lag domestic travel, but it’s also strengthening. Evercore ISI analysts Oscar Sloterbeck and James Walsh believe capacity is poised to increase in April as we head into the busy summer travel season.
This belief is confirmed by Expedia, which expects an “amazing summer.” Expedia for Business president Ariane Gorin said recently that the online booking agency is seeing a rise in the number of U.S. travelers searching for European packages. “People are keen to spend the money that they have saved during the pandemic on travel,” she said.
Numbers don’t lie: Google searches in the U.S. for “flights to Europe” hit a pandemic high at the end of February. We expect to see the metric jump ever higher next month as families lock in their summer travel plans.
Air Cargo at All-Time Highs
Not to be outdone by air passenger volumes, air cargo capacity continues to trend upward. In the three months ended January 2022, industry-wide cargo ton kilometers (CTKs), a measure of cargo volume, rose 7.2% year-over-year to hit their highest levels on record, according to the International Air Transport Association (IATA).
Seasonally adjusted, the value has cooled somewhat, but nevertheless this is an incredibly bullish reading for air cargo and demand in general. Looking at specific regions, Europe-North America increased 25.3% while Asia surged a remarkable 42.3%.
Alaska Airlines, one of our favorite names in the industry, is positioning itself to potentially capitalize on this surge in demand. The carrier is reportedly converting two of its Boeing 737-800s into cargo jets on a bet that pandemic-era freight revenues remain high.
Want to learn more about airlines and gaining exposure to the industry? Explore the U.S. Global Jets ETF (JETS) by clicking here!
All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.
Please carefully consider a fund’s investment objectives, risks, charges, and expenses. For this and other important information, obtain a statutory and summary prospectus for JETS here. Read it carefully before investing.
Disclosures: Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the funds. Brokerage commissions will reduce returns. Because the funds concentrate their investments in specific industries, the funds may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries. The funds are non-diversified, meaning they may concentrate more of their assets in a smaller number of issuers than diversified funds. The funds invest in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks are greater for investments in emerging markets. The funds may invest in the securities of smaller-capitalization companies, which may be more volatile than funds that invest in larger, more established companies. The performance of the funds may diverge from that of the index. Because the funds may employ a representative sampling strategy and may also invest in securities that are not included in the index, the funds may experience tracking error to a greater extent than funds that seek to replicate an index. The funds are not actively managed and may be affected by a general decline in market segments related to the index. Airline Companies may be adversely affected by a downturn in economic conditions that can result in decreased demand for air travel and may also be significantly affected by changes in fuel prices, labor relations and insurance costs.
Fund holdings and allocations are subject to change at any time. Click to view fund holdings for JETS.
Distributed by Quasar Distributors, LLC. U.S. Global Investors is the investment adviser to JETS.