MacroEdge 2/9 Ozone Report: Record Air Travel Year in 2024, Industry Deep Dive, Tariffs, Inflation, and Market Chess

In this weekly report, we take a deep dive into the airline sector and travel demand, the Vision team provides its weekly update from Six covering tariffs, inflation, and market chess. #MacroEdge

Where Do We Go From a Record Air Travel Year? (@DonMiami3, MacroEdge Chief Economist)

Good Sunday evening MacroEdge Community (and to the YEET Community, where we are contributing to this evening), 

Where do we go from a record air travel year? 

That’s the question we’ll attempt to answer this evening - for both MacroEdge and YEET Readers. Nice to join you all again for this collaborative deep dive into the airline sector with Milt and the rest of the YEET Blog team. Airline travel had a mostly stellar year last year (in terms of total passenger miles, as well as for most airline stocks) outside of the exception for the Spirit debacle and some bankruptcies impacting smaller companies like Silver Airways and Set Jet. We discussed other tariff and employment risks in the Friday evening note - which if you missed - you can catch here: https://macroedge.substack.com/p/midnight-macro-redeye-note-macro

We laid out the narrative behind our risk matrix, defined as ‘TRUMPETS’: 

This evening instead of the usual weekly report we’ll dive into the latest in airline and travel data, and see where things are trending, after 4 years of a pandemic-revenge travel - that sent airline travel surging. Many broader macro variables could shift aggregate travel demand this year, namely on the employment and inflation side of the equations, as those are the most likely to induce pain on this high asset price environment. In addition to covering trends in air travel, we’ll briefly touch on a few airline companies themselves, as well as the JETS ETF, and broader valuations in viewing past correlations to the performance of airline stocks during periods of extreme valuations. 

There’s no denying that the blockbuster 2024 air travel year was impressive. Still, we’ll dive into the data tonight to assess where things are headed from here by looking at: current trends in travel, air travel macro data, risks to air travel this year, and air travel equity analysis. The trend in air travel is on a cooler trajectory to start the year than from 2021-2024, which aligns to other travel data signals pointing towards a year of normalization and cooling with the high-priced travel environment of 2025.