Are U.S. Airlines Set to Make a Comeback in 2021?
The year 2020 was a challenging one for the U.S. airline industry as the COVID-19 outbreak put travel restrictions in place to curb the spread of the virus. However, the situation has been improving gradually, thanks to the rapid vaccination drive in the country. In fact, the U.S. Centers for Disease Control and Prevention (“CDC”) stated that nearly one in two Americans have received at least one dose of the vaccine while half the citizens above the age of 18 were fully vaccinated as of May 25 morning, as mentioned in a Reuters article.
Notably, people are feeling safer to travel now and that has resulted in a bump up in the number of passengers on flights. Interestingly, on May 16, the Transportation Security Administration recorded 1.85 million passengers, as quoted in a Simple Flying article. Moreover, the article stated that this was the first day since the start of the pandemic when over 1.8 million people flew in one day, highlighting the strengthening rebound.
Adding to the positive sentiment is also the fact that the CDC has revised its travel guidelines for fully vaccinated people. Markedly, the CDC stated in a report that for traveling, people don’t need to get tested or self-quarantined if they are fully vaccinated or if they have recovered from COVID-19 in the past three months.
Meanwhile, the International Air Transport Association (“IATA”) also predicted a rebound this year, at least when it comes to domestic travel. Notably, a report by the IATA stated that domestic markets could recover to 96% of the pre-crisis levels in the second half of 2021, marking an improvement of 48% over 2020. Moreover, IATA expected North American carriers to be best placed to take advantage of the vaccination drive to boost domestic travel in the country.
Reflective of these positive developments, U.S. airlines have been ramping up flights to deal with the surging demand for air travel while introducing new travel routes. Notably, American Airlines Group Inc. AAL and JetBlue Airways Corporation JBLU stated that they are adding 24 new routes in eight new cities, as part of their Northeast Alliance partnership, as cited in a New York Post article. Notably, both American Airlines and JetBlue currently carry Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, another Simple Flying article mentioned that American Airlines is planning to expand its flight options to Spain, as the country is set to open up on Jun 7, for fully vaccinated visitors. Meanwhile, a PR Newswire article stated that United Airlines Holdings, Inc. UAL is going to add 400 flights to its July’s schedule, compared to June, while it will also resume and add new routes and increase its domestic network by 17%, in comparison to its June schedule.
Meanwhile, jet fuel prices, which catapulted from the lows of last year, were seen coming down last week. Such a scenario bodes well for airlines as it might help them in reducing costs. Notably, data from IATA showed that in North America, for the week ended May 21, jet fuel prices dropped 3.1% from the previous week.
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