With a strong holiday season expected, and a rise in U.S. passport issuance, there’s good reason to believe the travel industry will see durable growth in the year ahead.
----- Transcript -----
Welcome to Thoughts on the Market. I'm Ravi Shanker, Morgan Stanley's Freight Transportation and Airlines Analyst. Along with my colleagues bringing you a variety of perspectives, today I'll discuss our view on airline travel in 2024. It's Wednesday, November 29th at 10 a.m. in New York.
Travel plans are in most people's minds over the holiday season, and many of us just experienced firsthand the hectic Thanksgiving holiday weekend. On the Sunday after Thanksgiving, the US Transportation Security Administration, or TSA, screened more than 2.9 million passengers, which was the most ever for a single day. Overall, the TSA's reported number of travelers last week was up 4.2% versus 2019 and has been tracking up nearly 6% versus 2019 for the month of November. This is impressive given that November is typically a slower leisure travel month.
Furthermore, despite record travel over the last several weeks, airlines achieved record low cancellations over the Thanksgiving weekend as well. This all bodes well for the upcoming holidays. We continue to expect a strong holiday season ahead, as demand for air travel is showing no signs of slowing. And despite concerns around choppy macro conditions, we continue to see no signs of a cliff in demand. Meanwhile, our survey work indicates that holiday travel intentions remain robust among all consumers and not just high income households.
At the same time, corporate travel budgets in 2024 are trending in line with expectations, and business travel is likely to mirror domestic leisure travel just on a delayed basis. Smaller enterprises continue to lead the way for corporate travel demand. Among companies with less than $1 billion in revenue, 41% are already back to pre 2020 travel volumes. Right now, the primary barriers to corporate travel appear to be cost concerns as well as the economic and market outlook. This suggests that constraints on corporate travel may be cyclical rather than structural.
One final observation which relates to both international business and leisure travel is that US passport issuance is also up. According to US government data, as of early November, 2023 had already seen the issuance of over 24 million passports. That's 9% higher compared to 2022. This is a new record which demonstrates that people want to travel now more than ever, particularly internationally. Over the past 25 years, the number of US passports issued per year has noticeably increased after major economic events such as the dot-com bubble in the early 2000s, the global financial crisis in 2008-2009, with the latest being post-Covid in 2022. We continue to believe that this is not a one and done travel spike, but a durable growth trend. All told, it looks like we may be entering a new golden age of travel in the 2020s.
Thanks for listening. If you enjoy the show, please leave us a review on Apple Podcasts and shared Thoughts on the Market with a friend or colleague today.
Michael Zezas: Why Geopolitics May Matter More in 2024
Will the Fed’s Pivot Favor Bonds Over Equities?
Mike Wilson: Does the U.S. Equity Rally Still Have Steam?
Economic Roundtable: What’s in Store for ’24?
Sustainability: Mixed Signals on Decarbonization After COP28
Michael Zezas: The U.S. Election, Clean Energy and Healthcare
2024 China Outlook: Can Growth Rebound?
Mike Wilson: Could Bond Market Consolidation Weigh on U.S. Equities?
David Adams: A Contrarian Call on the U.S. Dollar
2024 Asia Equities Outlook: India vs. China
An Early Guide to the 2024 U.S. Elections
2024 Asia Economics Outlook: Still Divergent?
Mike Wilson: Are Markets Following the Right Playbook?
Andrew Sheets: November’s Early Holiday Gift to Investors
Pamela Kaufman: Anti-Obesity Meds Could Bite Into Food Sales
How Education Companies Can Benefit from AI
Vishy Tirupattur: Debating the Outlook
Special Encore: Matt Cost: How AI Could Disrupt Gaming
Special Encore: US Economy: What Generative AI Means for the Labor Market
Create your
podcast in
minutes
It is Free
The emPOWERed Half Hour
Now, What’s Next?
Access and Opportunity
At Scale: A Sustainability Podcast