Air travel broke records over the 4th of July holiday weekend, with the TSA (Transportation Security Administration) screening over 3 million passengers on Sunday alone. The Points Guy founder Brian Kelly joins Wealth! to discuss the state of air travel as the summer vacation season kicks off.
Kelly notes that most airlines have increased their flights to Europe as consumer demand rises. Round-trip prices have also dropped, allowing more travelers to embark on their European vacations this summer. He attributes this travel boom to the increased accessibility of low-cost airline carriers and consumer spending. Kelly explains that consumers are “going on the deals, but they’re not paying the top dollar” for these vacations.
He points to Delta Air Lines (DAL) and United Airlines (UAL) as well-positioned airlines as more travelers take to the skies: “Delta is going to consistently perform well as they pretty much always do, although they did revise their estimates down a little bit. United is the most global US airline, so I think they have the most upside to be had here.”
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This post was written by Melanie Riehl
Video Transcript
Well, high airfare costs and the threat of a hurricane didn’t stop Americans from flying last weekend.
In fact, air travel broke records over the fourth of July weekend.
The Transportation Security Administration ts A as you know said, it screened over 3 million passengers on Sunday alone marking an historic peak in travel.
For more on this.
I’m joined by Brian Kelly, the points guy founder, Brian.
Great to see you here today.
Ok, so we gotta wrap our minds around this.
What does the travel demand profile more largely look like here and how are we seeing people kind of navigate through some of the travel options that remain at this juncture?
Well, you know, it’s actually pretty positive for consumers.
Uh capacity is up and what trends I’m seeing is, you know, there’s a lot more flights to Europe and internationally and there were some amazing domestic deals.
So travelers definitely still have that appetite for Europe.
Most airlines have boosted their, their flights to Europe.
I was checking for a friend yesterday who wanted to come home early before the storm and everything was sold out.
So I’m not shocked even with over 600 canceled flights on Sunday, we still cleared that 3 million passenger mark for TS A which was the historic record.
But guess what?
The, the, the fare prices are not that crazy.
I, I’m booking in August business class round trip fares to Europe nonstop on big carriers 2500 to $3000 last summer.
Those were double.
So it’s interesting to see capacities up but airfares are not quite where uh I think they should be and I think we’re gonna see that in the corporate results as they start coming in later this week.
Why, why do you think that is?
It’s fascinating.
Uh You know, I think uh there are a lot of new low cost carriers.
I think consumers are now splurging um for premium economy, business class, you know, and, and of course, those traditional business travelers have not come back like they used to those, those pass, you know, the business class passengers paying $9000 last minute.
Uh It’s shocking because even this week you can fly Air France flying blue, uh multiple dates from major us cities for 50,000 miles in business class.
I’ve never seen so many good deals in both cash and points.
Um And I, I guess consumers are, are traveling, they’re, they’re going on the deals but they’re not paying the top dollar.
Ok. That’s really interesting.
Especially as it’s a consistent thread that we’ve heard from airline operators at least on the topic.
Quarter.
Over quarter and we’re set to kick off some of those earnings this week here as well with Delta being in focus, you know, a lot of people out there as we were talking about and, and really looking at what could come forward for airline earnings here, who are you anticipating will continue to be perhaps the best positioned at this juncture?
You know, I think Delta is going to consistently perform well as they pretty much always do.
Although they did revise their estimates down a little bit.
I think United, you know, United is the most global US Airlines.
So I think they have the most upside to be had here, you know, last year, they had some pretty tough uh cancellations with the 737 max nine.
I think it’s been a much smoother summer for them.
So, you know, I would say the underdog here would be United to kind of pull ahead a little bit in terms of profit.
I would look out the US carriers, you know, US domestic airfare is really low and uh you know, with the weather and the storm, I would put my bets on the United and Delta to really keep leading the pack in terms of profits for shareholders.
And you mentioned United’s annexation and of course exposure to Boeing as many of the other airline operators do as well, especially here in the US is that deterring travelers at all, I don’t think so.
You know, it certainly creates new cycles just like, you know, these extreme turbulence incidents, they go viral but people are still traveling and the fact of the matter is you don’t really have any other options besides Boeing and Airbus and most consumers are going on price.
And that’s what works the airlines know that, that’s why they dropped prices.
They’re filling planes, they may not make as high of a margin, but they’d still rather have full planes than, uh, than empty ones for sure.
Noted.
Indeed.