'The cup is half full at the moment' for the travel industry: Moody's SVP
Though the travel industry is seeing a steady recovery as the number of daily air travelers continues to rise, uncertainty looms with COVID-19 cases and hospitalizations seeing an uptick as well. According to Moody's (MCO) Senior Vice President Jonathan Root, however, things are still looking up for the sector going into the new year.
“I'm not confident in specific predictability, but I think the read through is positive,” Root told Yahoo Finance Live. “We're sticking with our positive outlook for the industry. We're looking at it as ‘the cup is half full’ at the moment. And it's going to get fuller through the holidays and as we approach spring, notwithstanding that infection rate trends are up right now.”
Indeed, the rising infection rate along with the highest Thanksgiving gas prices in eight years is not discouraging upcoming holiday travel. And gas for cars isn’t the only fuel that is seeing surging prices — jet fuel prices have recently risen past pre-pandemic levels as well, presenting a risk to airlines.
“We think the airlines can be profitable with higher jet fuel and where the price of Brent oil (BZ=F) is today,” Root said. “You know, the challenge is we're coming through — this is the recovery phase. So if we were beyond the pandemic normal activity levels, we'd be less concerned for sure.”
All in all, Root believes that the threat of government lockdowns making it more difficult to travel still poses a risk for a slowdown in the travel. But as long as the U.S. allows non-citizens to arrive, he said, growth will likely continue. According to Root, domestic TSA screening numbers are currently at 80% of 2019 levels even with limited international travel, suggesting strength in the U.S. airline industry.
“We think behavior is probably changing as well,” he added. “With more vaccinations and, you know, the medicines coming, that should be an influencing factor that maybe can keep the restrictions low enough to allow travel to happen.”
In the period since Nov. 8, Root said that a similar “meaningful uptick” in daily airport security screenings has not been seen internationally. However, he believes that this may come with the holiday season as people reconnect with family.
“I can't predict which government may become more restrictive in what time frame. And that is the key for the international recovery,” Root said. “We do feel that there is still strong pent-up demand, not only for leisure, but for business travel and even in international long-haul travel.”
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV
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