Thanksgiving Travel Looks Strong. But History Has a Warning for Airline Stocks.

Thanksgiving travel demand is looking robust as millions of people fly across the U.S. for the start of the holiday season. Airline stocks need a boost after a tough few months, but history suggests it may not get one into the end of 2023.

The
U.S. Global JETS
exchange-traded fund, which tracks the performance of airlines, has fallen between the day before Thanksgiving and the year-end for five consecutive years. It averages a 1.8% decline over that period in the past eight years.

In the shorter term, a lift does seem to follow the holiday. The JETS ETF has risen 0.9% on average between the day before Thanksgiving and the following Thursday since 2015.

History is only a guide, though, and a strong holiday season could ensure that the sector’s nascent recovery keeps going, or at least prevent a return of downward pressure. Airline stocks had a stellar first half of the year but slumped from July through October as optimism over summer demand was replaced by fears over rising costs and softening domestic demand.

Of the major airline stocks, only
Delta Air Lines
(ticker: DAL) and
United Airlines
(UAL) are up so far in 2023–9% and 6% respectively.

With domestic leisure demand weakening and business travel yet to fully recover, the typically strong holiday peak periods have become more important for the sector this year.

While the busiest days of the holidays are yet to come, it’s been an encouraging start in terms of demand.

The Transportation Security Administration said it expects to screen 30 million passengers at U.S. airports over the 12-day period between Friday Nov. 17 and Tuesday Nov. 28. It’s a good guide to to the volume on passengers traveling. The data available for the first five days of that period–through Tuesday–suggest that target is attainable. In those five days, 12.8 million people have passed through U.S. airport checkpoints.

The TSA expects Sunday to be the busiest air travel day in U.S. history, beating the 2.88 million passengers flying on Jun. 30, 2023.

A record-breaking holiday period is the bare minimum airline stocks need to reverse their fortunes, and even that may not be enough to lift the sector for long.

Write to Callum Keown at [email protected]

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