Airlines ETF Monthly Report: Key Takeaways
Just a few weeks after millions of Americans travelled for Thanksgiving, the Omicron variant emerged as many travellers began to set out for Christmas and New Year’s – which has not only worried public health officials, but complicated travel plans domestically and abroad. Rishabh Chauhan, a University of Chicago doctoral candidate studying public risk perception and behaviour during the pandemic, said early reports of the variant appearing to be more transmissible, but less dangerous, will likely leave most holiday travel plans intact. [1]
In its “Impact of COVID-19: Data Updates” report, Airlines for America highlighted on December 22, 2021 some interesting statistics of the travel industry. New ticket sales, for example, are rising, but demand for corporate and long-haul international air travel continues to lag, leaving revenues depressed. Average fares remain well below 2019 levels, and air cargo demand, which reached a record high in 2020, has risen further in 2021. [2]
On December 14, BBC.com reported that the UK government said all 11 countries will be removed from the UK’s travel “red list.” The red list was reintroduced in late November as a precaution after the emergence of the omicron variant. Health Secretary Sajid Javid said it had spread so widely, the rules no longer had much purpose. [3]
Macro Outlook
Cowen and Company’s senior airlines research analyst Helane Becker believes that summer 2022 will see a strong return on international travel, even with the emergence of new coronavirus variants. “Our view is the demand is going to be very strong,” said Becker, “with peaks and valleys based on COVID variants.” “People will hear there’s a variant. They’ll assess where they’re going and what they’re doing and probably insist on going anyways.” [4]
In the United States, though domestic-only travel plans remain the most popular, appealing to 59% of travellers according to CNBC, interest in overseas destinations is climbing. G Adventures, which offers guided trips globally, has seen overseas bookings jump nearly 35% in November, versus the same period in 2019. As stated in the article, the company is seeing “big demand” for trips to Peru, Costa Rica, and Morocco. [5]
According to an article from Simply Flying, technological advances and the easing of restrictions will dictate the tone of the air travel industry in 2022. While there will still be challenging conditions, some of the things investors can expect from the aviation industry next year include the following: 1) cargo could continue to boom, 2) several airlines announced the return of the Airbus A380, 3) new low-cost international offerings, and 4) of course the pandemic will continue to take its toll. [6]
Airlines ETF and Index Performance (As of 31.12.21)
|
|
1M
|
3M
|
6M
|
YTD
|
12M
|
SI
|
|
U.S. Global Jets UCITS ETF (Acc)
|
4.83%
|
-10.36%
|
-12.40%
|
-17.91%
|
NA
|
-17.91%
|
|
U.S. Global Jets Index
|
4.76%
|
-10.22%
|
-12.10%
|
-17.64%
|
-5.01%
|
-17.64%
|
Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/12/2021
Performance before inception is based on back tested data. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product.
Learn more about our Airlines ETF
Download the PDF