Airline Industry Heads Back To Normal As Analyst Sees ‘Insatiable’ Demand

Air travel has resumed, oil prices may be falling and winter ends next week. Is that enough to kick start the airline industry for 2022?

With the threat from the pandemic apparently waning in the United States, about 10.6 million people were screened at airports Wednesday through Sunday, the Transporation Security Administration said. That is more than the 10.1 million who were screened over the similar period surrounding Thanksgiving 2021.

On Friday, March 11, about 2.30 million cleared, the heaviest day since Nov. 28, the Sunday after Thanksgiving, when 2.45 million were screened, TSA said.. Yesterday, 1.99 people were screened.

Oil prices are very high, but may be declining.

Brent crude futures fell 1.6% on Sunday to $110.85 a barrel. Brent last week fell 4.8% after reaching $139.13 on March 7.

Before the Ukraine invasion, the last time oil prices traded at $100 was 2014. Prices have climbed steeply since 2020, when they averaged about $39 a barrel.

In a report issued this morning, Bank of American analyst Andrew Didora wrote that leisure bookings are near 2019 levels and corporate bookings are improving.

“Leisure demand remains robust as this week’s volumes stepped up to just (negative 1.4%) vs. 2019, which is the best level of the year,” Didora wrote, adding, “We have heard from numerous airlines in our recent trips that leisure demand is ‘insatiable’ and pricing is showing larger gains.

He said domestic pricing was 93% recovered this week compared to 80% recovered a month ago.

As for business demand, Didora said corporate bookings through large channels improved to down 35.9% compared with 2019, while corporate bookings through smaller channels was down 4.4%.

Additionally, he said, international bookings are down 25.5%, despite the invasion of Ukraine.

In a report issued Friday, JP Morgan analyst Jamie Baker wrote that on March 2, Chase daily card spend on air travel eclipsed 2019 levels for the first time since Jan. 29, 2020. “An important milestone has been reached,” Baker wrote.

“While the fuel narrative has understandably overtaken that of demand in recent weeks – and is likely to continue dominating the narrative at the J.P. Morgan Industrials Conference next week – demand trends continue to move in the direction where overtaking fuel’s meteoric rise, at least during the summer peak, may prove possible,” Baker wrote.

The major airlines will all offer observations at the conference on Tuesday. American Airlines CEO Doug Parker is scheduled to speak, perhaps in his last formal appearance before investors before his scheduled March 31^st retirement.

Airline shares were rising Monday morning. Shortly after 10:30 a.m., most airline shares were up between 2% and 4%.