On June 7, 2020, 441,255 travelers were screened by TSA, compared to 2,669,860 on the same day in 2019 – that’s 16.5% of the passenger volume. March 22nd was the last time TSA screened more than 400,000 passengers.
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Today vs. The Low Point for Coronavirus Travel
The low point of the coronavirus-induced decimation of air travel was on April 14th, 2020, when just 87,534 people flew in the US versus 2,208,688 on the same date in 2019, 4% of the prior period’s volume.
This means that we’ve seen more than a fourfold increase in air passenger volume since the low, but still down 83.5% compared to this day last year.
While on an absolute numbers basis, we can see that air travel is still just a fraction of where it was pre-virus, I’m actually pretty surprised how quickly the rate of air travel has increased in under 2 months.
It shows that even though airlines aren’t holding firm on their mask policies, more and more people either have to travel or feel comfortable traveling because, either way, they are!
What does this mean for air travel and the airlines?
It’s just showing that things are heading in a positive direction. All of this is simply data that indicates that people are heading to the airport again and at 4X the volume of 2 months ago, but still down more than 80% from the same period last year.
What I find absolutely mind-blowing is the airline stocks. Just to choose two domestic airlines:
American Airlines (AAL)
2020 high: $30.47 (Feb 12th)
2020 low: $9.04 (May 15th)
Today’s price: $20.31
Change from High to Low: 70.4%
Change from Low to Today: 125%
Delta (DAL)
2020 high: $62.03 (Jan 17th)
2020 low: $19.19 (May 15th)
Today’s price: $36.97
Change from High to Low: 69%
Change from Low to Today: 93%
Why do I find this mind blowing?
Because with passenger volume still down 85% from a year ago, with travel restrictions around the globe, and with even airline’s like Delta saying they will “emerge as a smaller carrier” the stock market is trading them at approximately 2/3 of their pre-coronavirus valuations.
That means that the market has assumed that everyone will be getting back to travel nearly immediately and there will be no second wave of coronavirus or other setbacks. It also assumes that business travelers will return in droves rather quickly, since let’s not forget that business travelers fill those seats up front that MilesTalkers aren’t redeeming miles for…
In any event, I guess I’m saying that I think the airline stocks are insanely overvalued right now (basically priced for 2022 perfection) but I’m very happy to see that so many people are flying again and I certainly hope that the trend does continue. That said, even if we keep up this trend week after week, I struggle to see the valuations Wall Street (or should I say, Robinhood) is ascribing to the airline stocks…
I’d love to hear what you think! Am I being overly bearish on airline stocks?
Let me know here, on Twitter, or in the private MilesTalk Facebook group.
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New to all of this? My “introduction to miles and points” book, MilesTalk: Live Your Wildest Travel Dreams Using Miles and Points is available on Amazon and at major booksellers.
