Airlines Monthly Report | July

The first monthly report for our Jets Airline ETF explores the global airlines industry and how the success of the US vaccine roll-out has increased demand both domestically and nationally.

• The global airlines industry continued to show signs of resurgence during the month of June. Web traffic for airlines showed improvement as well as an increase in the number of bookings. U.S. airlines, specifically, along with European carriers, saw web traffic notch back toward 2019, pre-pandemic levels each month. TSA checkpoint crossings continued to climb back toward pre-pandemic levels in the U.S. as well – climbing back to 2019 levels.
• The U.S. was added to the European Union’s safe travel list in June, along with a handful of other countries including Japan, New Zealand, Albania, and others, but excluding the United Kingdom. As stipulated in the European Council’s recommendation, the list of countries will continue to be reviewed every two weeks and updated accordingly.
• The number one and number three largest states by GDP in the United States – California and New York – lifted nearly all restrictions in June as the share of residents who has received at least one vaccine dose surpassed 70%. This is positive for travellers and airlines booking flights to and from these popular destinations, both domestically and internationally.

Performance Review

Breakdown of Annual Performance

The U.S. Global Jets UCITS ETF was launched on the London Stock Exchange on June 17, 2021. Through month-end, on June 30, 2021, the underlying Index has shown a performance of -6.31%, according to Bloomberg data. 

On June 28, 2021, our Jets Airline ETF launched on the Xetra-Borse Frankfurt. On June 30, 2021, the JETS UCITS ETF launched on the Borsa Italiana. 

Contributing to performance of the Index since launching the Airlines ETF on the LSE continues to be increased passenger traffic, borders reopening and vaccine distribution globally. One headwind for the industry as whole, remains higher fuel prices, which are airlines top expense.

U.S. Global Jets UCITS ETF Performance Table (As of 30/06/2021)

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. 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. Source: Bloomberg / HANetf. Data as of 30/06/2021.

Industry News

A poll conducted by the Global Business Travel Association in June showed that domestic business travel in the U.S. is well on its way to recovery. Forty percent of respondents said that business travel within the country where their firm is based has already resumed, while a third said that their company has either decided on a start date or is working toward a date.

In June, more than 56.7 million passengers were screened at U.S. airports, the greatest amount since February 2020, soon before the entire world economy went into lockdown.[1]

The EU recommended lifting travel restrictions on non-essential travel from 14 countries, including the United States. China is included on the list, but not the U.K. 

United Airlines ordered 270 Boeing and Airbus narrow body aircrafts, driving capital commitments to $35.9 billion as of May 31, 2021, of this year versus $24.3 billion as of December 31 of 2020. Capacity growth is expected to be 4% to 6% until 2026.[2]

The fund’s index (JETSX) rebalanced at the start of June, at which point Internet Booking and Media companies were added to the potential holdings’ universe.

Outlook

During the most recent G7 summit, the U.K. and the U.S. set up a new taskforce that will assess how to safely re-open transatlantic travel between the two countries. The Biden administration is also setting up an expert group with the EU to reduce travel restrictions. Meanwhile, France and Spain joined seven other EU countries in launching their digital COVID certificates, which should allow frictionless travel within the EU. 

The recovery of business travel is largely correlated with vaccination rates, which vary greatly region to region. Low-income countries are lagging the rest of the world, with only 1% of people having received one dose, according to Our World in Data. In the U.S., vaccine hesitancy remains in certain populations, even as the highly transmissible Delta variant is now believed to be the dominant strain of coronavirus in the country.

That said, we continue to see increasing capacity in the U.S. Schedules for June, July and August are showing capacity at 88%, 92% and 93% of 2019 levels, respectively. Schedules for June, July and August are showing global capacity is expected to be at -49%, -28% and -31% of 2019 levels, respectively. Meanwhile, the number of tickets booked through corporate channels steadily continues to improve, now down only 57% versus 2019’s numbers. [3] Trends are even better in smaller travel agency data, which supports the belief that a small to medium corporate travel recovery has begun well before large corporate travel recovery.

Learn more about our Jets Airline ETF by visiting the fund page here.