Back to top

Image: Bigstock

5 ETFs to Play Robust Christmas Travel

Read MoreHide Full Article

The ongoing holiday season appears to be one of the best ones for transportation companies. This is probably the result of the continuation of the “revenge travel.” The term emerged after the initial waves of the COVID-19 pandemic, describing the pent-up demand and enthusiasm of consumers to travel again after long periods of lockdowns and travel restrictions.

According to the American Automobile Association (AAA), the 2023 holiday season is projected to be the busiest period for domestic air travel in more than two decades or since it started tracking in 2000.

The Thanksgiving weekend already saw record domestic traffic and now the AAA projects 7.5 million passengers traveling through U.S. airports during the 10-day holiday season between Christmas and New Year, higher than the 7.3 million recorded in 2019 (read: 5 ETFs to Make the Most of Solid Thanksgiving Travel Trend).

The average cost of round-trip tickets has been recorded as "slightly lower" than previous years.

According to the AAA, the number of people opting for alternative modes of travel, such as trains or cruises, is expected to exceed 2019 levels. This marks a 2.2% increase from 2022 and stands as the second-highest number since the AAA began recording travel data in 2000.

Last year, inclement weather disrupted travel plans during this period, leading numerous airlines to cancel thousands of flights nationwide. However, this year, most airlines are better prepared to handle such situations more efficiently.

Airline companies suffered significantly during the pandemic, which brought travel to a halt. This resulted in major U.S. airline companies experiencing substantial losses in both 2020 and 2021. However, the subsequent year saw an increase in air travel, but 2023 is emerging as a pivotal year for the airline industry.

2024 Likely to be Record Year for Airlines

In fact, the International Air Transport Association (IATA) anticipates a solid surge in traveler numbers and revenues for airlines in 2024. The sector is projected to achieve a net profit of $25.7 billion, with a 2.7% net profit margin. This forecast marks a modest improvement from the revised estimate of $23.3 billion net profit and a 2.6% margin for the current year, as quoted on CNBC.

ETFs to Play

Against this backdrop, below we highlight few travel ETFs that could be tapped for gains in the near term.

U.S. Global Jets ETF (JETS - Free Report)

The underlying U.S. Global Jets Index tracks the performance of Airline Companies across the globe with an emphasis on domestic passenger airlines. The fund charges 60 bps in fees.

SPDR S&P Transportation ETF (XTN - Free Report)

The underlying S&P Transportation Select Industry Index represents the transportation segment of the S&P Total Market Index. The fund has exposure to industries like Cargo Ground Transportation (29.88%), Passenger Airlines (28.50%), Air Freight & Logistics (17.56%), Passenger Ground Transportation (9.78%), Rail Transportation (7.73%) and Marine Transportation (6.55%).

ALPS Global Travel Beneficiaries ETF (JRNY - Free Report)

The underlying S-Network Global Travel Index identifies exchange-traded stocks of companies that are materially engaged in the global travel industry. The fund charges 65 bps in fees.

Defiance Hotel Airline and Cruise ETF (CRUZ - Free Report)

The underlying BlueStar Global Hotels, Airlines, and Cruises Index is a rules-based index that consists of globally-listed stocks of companies that derive at least 50% of their revenues from the passenger airline, hotel and resort, or cruise industries. The fund charges 45 bps in fees.

ETFMG Travel Tech ETF (AWAY - Free Report)

The underlying Prime Travel Technology Index NTR tracks the performance of globally exchange-listed equity securities or corresponding ADRs or GDRs engaged in Travel Technology Business which provides technology, via the internet & internet-connected devices such as mobile phones, to facilitate travel bookings & reservations, ride sharing & hailing, travel price comparison & travel advice. The fund charges 75 bps in fees.

Published in