This week saw the US opening its doors to vaccinated travellers from abroad, and it provided a much-needed boost to the nation’s ailing airline industry. Shares in leading US airlines dramatically rose following the lifting of restrictions on international travel.
American Airlines saw its stock price rise by 14% and there was a 13% rise for Delta Airlines. These figures reflect the growth in November which is superior to the overall 2% rise for the S&P 500.
United Airlines made its highest close since late June and exchange traded funds such as the JETS ETF which contains assets from American Airlines and Delta rose 11% in November. As such, Delta has gone as far as to predict that three-quarters of its business would be back to normal by the end of the year.
Investors are hoping that the easing of travel restrictions will cause a boost in bookings from people who have been unable to visit the US since lockdown was enforced in mid 2020. So far, it looks like the gamble has paid off with full or nearly full flights entering the US on the day that the restrictions were lifted. All of which will be a desperately needed lift to an airline industry that is expected to be hit by losses of over $200 billion between 2020 and 2022.
Further optimism in global travel
It’s not just US airlines that have benefited from the lifting of travel restrictions. Major European airlines such as British Airways and Air France KLM also saw their stock prices rally as a result of the decision. Lufthansa reported that over 30 full flights had landed in the US on the first day of the eased travel restrictions, while Virgin Atlantic, Swiss Air and British Airways all said that passenger numbers were high.
It’s all part of a greater trend towards more relaxed travel across the world for the first time since the pandemic struck. Leading international travel hubs such as Singapore recently announced that it would eliminate the quarantine required for vaccinated visitors from specific nations.
As such, there have been positive effects felt all across the travel industry. Online booking brands like Expedia noted nearly a 100% increase in revenues compared to the same time last year, as well as a stock price boost of over 10% in November.
Caution within the tourism industry
While the easing of restrictions and accompanying stock rises will be greeted by the travel industry, there is still a cautionary note in the air. After all, new strains of the Covid-19 virus such as the Delta variant put pay to moments of optimism at a similar time last year, and it’s easy to see another variant wreaking havoc once more.
Plus the airline industry is grappling with soaring fuel prices that are showing no signs of easing. With little choice but to pass the cost onto customers, it could take a little longer until the airline industry is back to its best.