US 2021 Leisure Travel Trends Remain Slow

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US 2021 Leisure Travel Trends Remain Slow

We continue to monitor the US economic reopening trade, especially with regards to leisure travel. Let’s start by looking at trends in airline ticket prices, which is how we measure incremental real-time consumer demand and eventual airline profitability. There’s little human decision-making bias in these figures given that computer algorithms set these costs based on demand to maximize load factors and total revenues.

Here is a comparison of the cost of a non-stop, round-trip flight from New York to Orlando during popular times to fly over the balance of this year. We’ve also included comps to our last look a month ago (using Wednesday to Wednesday timeframes to make the data comparable):

  • 4th of July week (6/30 – 7/7): now $215, up from $152 a month ago (+41 percent).
  • Labor Day week (9/1 – 9/8): now $177, up from $135 (+31 percent).
  • Thanksgiving week (11/24 – 12/1): now $348, up from $336 (+4 percent).
  • Christmas week (12/22 – 12/29): now $234, down from $244 (-4 percent).

Takeaway: US airlines have picked up some pricing power over the last month as we head into the Summer months. There is, however, a real drop-off after Labor Day weekend. Interest in a fly away vacation is clearly improving, but Americans seem focused on nearer-term trips.

Now let’s move on to another way of assessing air travel demand: Google Trends query volumes for “Jetblue” (blue line), “Southwest Airlines” (red line), “United Airlines” (yellow line), “American Airlines” (green line) and travel booking site “Expedia” (purple line) since January 2019. The chart below shows:

  • Searches for “Jetblue”, “Southwest airlines”, “United Airlines”, “American Airlines” and travel booking site “Expedia” are all down 20 pct, 5 pct, 39 pct, 26 pct and 28 pct respectively since the start of 2019.
  • They have all marginally improved this year but are still nowhere near where they were pre-pandemic.

Takeaway: US consumer demand for air travel still dramatically lags 2019. Recent data from the US Transportation Security administration showed that Sunday’s (May 9th’s) traveler throughput totaled 1.7 million people, the highest number in over a year. Still, that is 29 percent below the equivalent day in 2019. The average of our Google air travel comps is -24 percent, and that’s a reasonable proxy for near-term travel intentions. Better than -29 percent, true, but still nowhere near the old highs.

So where is the pent-up demand for flying and travel that many anticipated with more vaccinations and warmer weather? Three closing points:

#1: We’re still missing European tourism, which has been a drag on pricing. European travel to the US remains limited and is weighing on typical Summer demand for US airlines. For example, UK Google searches for “Orlando” are at 2-year lows right now, and down by 66 percent from their average 2019 levels. The same goes for German searches for “Miami”, at 2-year lows and down 40 percent from 2019.

#2: Americans are in the routine of mostly staying close to home this Summer. Our other work using Google query volumes shows people are still searching for items (mostly durable goods) to improve their homes. And unlike US Google searches for the airlines, those for “Airbnb” are up 24 pct since the same week in 2019. People are either staying home or taking vacations within driving distance.

#3: American families may want to go on vacation but are waiting for safety protocols to ease up for a more enjoyable experience. Searches for “Disney” are still flat over the last year, for example, even with the Summer months close ahead.

Bottom line: it is going to take more time for pandemic behaviors to unwind – 2021 is simply not going to be a carbon copy of 2019, or anything close to it. We are going to closely monitor this data as the weather continues to warm. And as much as we believe Americans want to travel and have the money to do so, they are only coming back slowly versus the quick snapback many expected. We’re still bullish on the airline sector and think they will rally as load factors and pricing improve.