undercarriage of aircraft on tarmac

Consumers are still enthralled with travel after being locked down for more than a year during the COVID War and stock prices of travel-related companies are rising like fully-loaded airplanes out of O’Hare.

American Airlines Group shares are up 34 percent this year and United Airlines Holdings has gained 36 percent.

Cruisers Carnival Corp. and Royal Caribbean Group have jumped 46 percent and 38 percent, respectively.

Caesars Entertainment stock has added 32 percent to its price and Marriott International 17 percent.

U.S. airports saw a daily average of 1.953 million passengers in January, 32 percent more than a year earlier and only 1 percent fewer than in January 2020, just before the COVID War began.

United’s revenue per seat-mile, a measure of airline efficiency, reached 16.15 cents last year, compared to 13.9 cents in 2019.

The influx of travelers has given airlines a flood of new cash and is enabling them to pay down debt incurred during the COVID era.

“I’ve never seen a more constructive backdrop for the industry,” Ed Bastien, Delta Airlines CEO, said in a December call with analysts. “I believe our industry will see tens of billions of dollars in incremental demand in the next few years.” 

Marriott’s 2022 results also topped 2019 levels, the company said.

However, the surge of air passengers has left air carriers struggling to meet demand, The Wall Street Journal noted: airlines are short of pilots, Boeing still wrestles with supply chain snags in building planes, and airports are at or close to capacity.

“When demand is high and you limit growth, fares go up,” airline analyst Helane Becker at Cowan & Co. told the WSJ.  

TREND FORECAST: The demand for airline seats, hotel rooms, and cruise line cabins will ease this year as inflation and higher interest rates gnaw at household budgets and the post-COVID demand for travel plays itself out.

However, demand will remain strong among well-paid remote workers able to set up shop in exotic locales of their choice.

High-flying corporate travelers also are back on the road, although not in the same numbers as pre-COVID; more business travel now tends to be within businesses’ home territory. Thanks to teleconferencing’s new place in corporate infrastructure, the bulk of business travel will be on a more modest scale. 

Therefore, over the long term, travel stocks may not be the profit play they are today.

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