Airlines, one of the hardest hit industries within the travel and leisure sector, are beginning to see a slight uptake in domestic holiday travelers ahead of the U.S. Thanksgiving holiday on Thursday despite warnings from the U.S. Centers for Disease Control and Prevention about the surging coronavirus outbreak throughout the nation.
The Transportation Security Administration screened over 1 million travellers each on Friday and Sunday, the highest number the commercial airline screening agency has recorded since mid-March. Yet, those numbers are still significantly lower than this same time period last year, with average daily screenings down more than 64% from the same period in 2019.
Since the coronavirus pandemic, airlines have issued a slew of new protocols to help travelers feel safe. The new procedures include enhanced sanitary measures, new air filtration systems, mandatory facial covering rules, pre-flight health screenings and testing, alongside other costly measures like blocking middle seats and allowing passengers to change or cancel flights that are too crowded.
While recent research has found that it is difficult to catch the coronavirus on a plane with all new health protocols, many would-be travelers have opted against booking flights for the time being. The coronavirus pandemic has but the airline industry in a tough situation as it tries to stay afloat. For now, sustained recovery for commercial airlines is only expected to arrive once travel restrictions are lifted post-pandemic.
Vaccines May Bring Early Recovery
Despite the ongoing impact the pandemic has brought on the industry, travel stocks have largely benefitted from recent announcements from coronavirus vaccine frontrunners like Pfizer
There is a general desire to go back to "normal," and a vaccine may be the key to bringing the pandemic to a speedy end. Still, a vaccine would be needed for a majority of a nation in order to bring the population to herd immunity, or the level of immune individuals needed for a virus to not spread easily and protect those vulnerable. Experts have estimated that more than 60% of a nation's population will need to be vaccinated for the coronavirus to reach herd immunity.
A recent Gallup Panel survey conducted before the release of late-stage trial analysis from vaccine frontrunners showed that Americans were more willing to get a vaccine than prior surveys. The survey, conducted between Oct. 19 to Nov. 1, found that 58% of Americans polled were willing to get a coronavirus vaccine, up from the 50% polled back in September. For those who are unwilling to receive a vaccine, 37% fell that the vaccine's timeline was too rushed, while 26% say they want to wait to confirm that the vaccine is safe.
Travel Industry ETF Check-In
US Global Jets ETF
JETS provides exposure to both U.S. domestic and international airline companies and manufacturers of all capitalizations. The index is weighted towards U.S. passenger airlines, which make up nearly 70% of its portfolio. The fund is down over 30% for its year-to-date, with the ETF taking a huge hit from the historically low flight demand brought by the pandemic. This fund is poised to recover alongside airlines, which have yo-yoed throughout the year, with volatility prompted by coronavirus headlines.
ETFMG Travel Tech ETF
AWAY's portfolio contains companies involved in travel technology weighted based on market cap and liquidity, with top holding including Booking Holdings
VanEck Vectors Gaming ETF
BJK provides exposure to companies involved in casinos, sports betting, lottery services, gaming services, gaming technology and equipment. This fund has turned positive for its year-to-date, standing up over 4% as it continues to climb from March's lows.
Invesco Dynamic Leisure and Entertainment ETF
PEJ tracks a multifactor, tiered equal-weighted index of 32 U.S. entertainment and leisure stocks. The top sectors within its portfolio include double digit exposure to Restaurants & Bars, Broadcasting, Entertainment Products, and Leisure & Recreation stocks. While the fund provides a nice slice throughout the whole leisure and entertainment industry, it has yet to recover from the pandemic's impact, with the ETF currently down nearly 20% for its year-to-date.