US Air Travel Hits New Turbulence Despite Vaccines & 'Recovery'

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by Tyler Durden
Friday, Feb 12, 2021 - 08:40 PM

Trading the recovery and sensitive stocks linked to the reopening following a month and a half of vaccine rollouts have benefited traders who have piled into these stocks, such as airlines. For example, U.S. Global Jets ETF (JETS) has more than doubled since March 2020 low but remains well off its 2019 highs. There are new indications from travel-data firm Cirium that show the recovery in airlines could be reversing, this could be bad news for traders who have piled into JETS. 

Bloomberg, citing a new Cirium report, said the number of single-aisle aircraft in service has plunged since the beginning of the year amid a flare-up in COVID-19 cases across the country and fresh restrictions. 

Cirium's data showed single-aisle aircraft in service fell below the 8.8k mark on Feb. 5, a drop of 15% compared with Jan. 3 figures. 

"Wide-body usage slumped 14% from a Dec. 19 peak, though bigger aircraft remain comparatively far less popular, with just half the number in service compared with pre-pandemic levels as long-haul travel remains largely out of bounds," Bloomberg said, quoting the report.

Following months of soaring air travel numbers into the 2020 holiday season, U.S. passenger volumes dove in late January to their lowest levels in six months. 

The plunge in air travel comes as the Biden administration rolled out new virus travel restrictions through an executive order that requires negative COVID-19 tests of all travelers into the U.S., as well as a one week quarantine period. 

What could send passenger volumes even lower is the White Houses' proposed plan to test domestic travelers for the virus. 

Emerson Barnes, executive vice president of public affairs and policy at the U.S. Travel Association, was not pleased this week with the Biden administration mulling over the idea of domestic testing. 

"We really think that this is something that would really decimate the industry further," Barnes said. 

Heading into 2021, optimism was high for a rebound in global air travel, but that appears to be fading despite vaccine rollouts, with not just the U.S. air travel industry beginning to slump once more. Still, also Europe's air travel industry "looks like a black hole," according to a separate Bloomberg report. 

"Tourism flows, on the whole, are not expected to recover to their pre-crisis levels in 2021 fully," European Commission said. 

More or less, reverting our attention to the JETS ETF, the question we ask readers: Is upside limited?