Air ticket demand recovers but it’s hardly a boom!
Is the best for 2021 over?
Average Weekly Hours of All Employees, Manufacturing
Weekly hours of the manufacturing sector would appear to be waning, and still aren’t back to where they were pre-Covid-19 despite the optimism reflected in outlook and stock valuations. This might because labor and raw materials are not readily available, or it could also mean that there isn’t as much demand for goods as the market optimists might make you think. We will be watching the weekly hours from 06th September 2021 onwards as the additional USD 300 p/week on top of the current USD 300 p/week granted to the jobless this year (paid out by the Federal Pandemic Unemployment Compensation) will cease and it will be interesting to see if this can incentivize the jobless to go back to work or if there are no jobs to go back to, while time-out for post-Covid travels should also be nearing the end.
A new equilibrium is?
- One of the big components of the June inflation data was air tickets
- Demand has recovered but it’s obviously not back to where it was, yet
- Look at 2019, 2020 and 2021 (all of them through 20th July)
No wonder that ticket prices are booming – a loss of airline capacity and a missing two years of travel & demand growth. However, when considering that travel has been a characteristic of post-Covid especially for many of the vaccinated, then surely it might have been better, or perhaps the so-called boom isn’t really that wonderful.
When you zero in, you can see that we actually seem to have peaked at around 75-80% of 2019 – in fact, in aeronautical terminology, we seem to have stalled lately. This might be partly to blame due to the resurgence of Covid-19 or is that travel for business just isn’t as necessary with the adaptation of online seminars, conferencing and deal making, or is it also people don’t feel like spending the higher amounts for tickets, not being sure of the future?
Just look at that % in isolation – passenger numbers have begun to slip (as a % of 2019) which may because of rising Covid-19 cases, greater use of work-at-home methods that can avoid unnecessary travels. While it’s refreshing to see a post-Covid-19 recovery of sorts, it’s hardly a boom!
Our view is that inflation isn’t going to be chronic but rather acute and once supply chains have settled then the greater threat of deflation will return. Contact us for further information on portfolio risk hedging and constructing a balanced portfolio.
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About the Author:
Paul Gambles is licensed by the SEC as both a Securities Fundamental Investment Analyst and an Investment Planner.
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