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Holiday travel season is everything airline investors want: Busy and smooth at airports
Kamil Krzaczynski | Reuters
Travelers go through O’Hare International Airport before the Thanksgiving Day holiday in Chicago, November 20, 2018.
When Sarah Guinn and her family walked into terminal three at Chicago’s O’Hare Airport on Wednesday morning, she was pleasantly surprised.
“It is pretty calm,” said Guinn, who was flying to Denver for Thanksgiving. “We got here earlier than we needed to I think. You don’t want to get stuck, we got stuck once so we don’t want that to happen again.”
A relatively calm holiday weekend without any major storms or technical glitches that canceled or delayed scores of flights is welcome news for the airlines and their investors.
This year has been a bust for most airline stocks. American Airlines’ stock is down 30 percent so far this year. Southwest is down 20 percent and JetBlue is down 19 percent. Higher jet fuel prices earlier in the year cut into profit margins while many carriers struggled to raise airfares enough to offset the extra costs.
But the recent drop in jet fuel prices combined with strong demand has set the airlines up for a solid holiday season.
“We are looking as a very healthy fall season and it is certainly rolling right into a very healthy holiday season,” said Susan Donofrio, airline analyst at Macquarie Capital.
Thanksgiving has always been big for the airlines, but this year the number of people flying is expected to hit a record high. Airlines for America, an industry trade group, estimates 30.6 million people will take a flight during the 12-day stretch that wraps around Thanksgiving. The busiest day is expected to be Sunday when just more than 3 million people are scheduled to board flights.
Demand is strong thanks to the robust economy, low unemployment and high consumer confidence.
“The consumer has continued to show up to travel and we are looking at very healthy revenue trends going forward,” said Donofrio.
It also helps that airfares remain relatively low. The website Hopper.com, which tracks airfares, says the average domestic round-trip ticket is currently $222.
Perhaps the only glitch to the start of Thanksgiving weekend for travelers came Wednesday morning when the American Airlines mobile app went down for about 15 minutes. The company’s check-in kiosks at O’Hare Airport also went down due to a connectivity issue, which meant passengers had to stand in a long line to check their bags. American says flight operations were never impacted. “We are grateful for our team members in our airports who acted quickly to help our customers check in for their flights at our ticket counters to get them on their way for their Thanksgiving travels,” the company said in a statement it issued shortly after the issue was resolved.
— CNBC’s Meghan Reeder contributed to this report.
— By CNBC’s Phil LeBeau; Follow him on Twitter: @Lebeaucarnews