How Has COVID-19 Impacted the Travel Industry?

The travel industry has been hammered. As countries around the globe mandated “shelter in place” orders, airplanes have been grounded. Global air travel is down approximately 50%, according to Flightrader24, and even more in the United States.

How Has COVID-19 Impacted the Travel Industry - 112
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While planes are still moving from one location to another, the number of passengers that are flying has dropped off significantly. This has led the Airline industry in the US to request significant help as part of the US aid package to small and large businesses.

Air People Traveling?

The COVID-19 virus has created a global pandemic and many countries have mandated a “shelter in place” mandate. In India and Italy, citizens were asked to stay at home and only leave for essentials like food and medicine. In the US, 38-states have mandated “stay at home” orders while 12-states are still on the fence. The “mitigation” techniques help people stay away from other people and are put in place to reduce the spread of the coronavirus. This has hammered the travel industry.

According to the U.S. Transportation Security Administration (TSA), only 129,763 travelers were screen on Friday, April 3, 2020, versus 2.48 million on the same day a year ago. This works out to approximately 5%. While the number of passengers is down significantly, the number of flights that are commenced every day is down to a lesser extent. According to flighttracker24, the number of flights that have been commenced in the last week of March is down approximately 48% year over year.

Flight cancelations in the US are even higher. Flighttracker24 shows that approximately 55% of the flights have been canceled in the last week of March when comparing to the prior year. The number of flights is down by there are still plenty of planes traveling despite a waiver from the FAA. U.S. flights are still common despite the Federal Aviation Administration’s move on March 11 to waive “slot use” requirements that might have forced airlines to fly to meet minimum-use requirements.

The number of passengers in the air should decline even further as restrictions on post-cruise line travel has now been put in place. The Department of Homeland Security and Centers for Disease Control and Prevention has put in place restrictions that forbid cruise ship passengers and crews arriving in the US from boarding domestic commercial flights.

The restrictions will apply to everyone and would require 14-day quarantines for cruise passengers and crew.

How Have Airline Stocks Reacted to COVID-19

Airline stocks have significantly underperformed the broader markets as COVID-19 has spread throughout the globe. The US Global Jets ETF has declined 63% since early February compared to a 35% decline in the broader S&P 500 index. With approximately 5% of the travelers on board, it’s hard to imagine that many airlines can survive this pandemic.

Most of the major US airlines are down a similar amount. For example, American Airlines AAR is down 67% since early-February. Delta airlines are down 63% during the same period. Singapore Airlines has faired better declining only 40% from February to early April.

The Bottom Line

The upshot is that the travel industry has taken it on the chin, and its unclear how long it will take for these companies to rebound. Planes are inherently problematic when it comes to social distancing. The entire process of checking in and going through security is at odds with a mitigation technique. Airline stock prices have been hammered and unless these companies can get government assistance, they face a daunting future.


Interesting related article: “What is the Coronavirus?