As the holiday season approaches, travel activity across the United States is experiencing a surge that is set to break records anew, fueled by a combination of falling gasoline prices and a resurgence in consumer confidence. Gene Boehm, the President and CEO of AAA Inc., the renowned roadside assistance and travel services organization, recently detailed the upward trajectory of travel volumes during an interview on CNBC's "Squawk Box." Boehm emphasized that the increase in travel is a continuous trend emerging since the pandemic, with no indication of decline.
According to Boehm's projections, more than 122 million Americans plan to travel during this holiday season, representing a 2% increase compared with the same period last year. This expectation underlines a consistent annual growth pattern in holiday travel since the disruptions caused by the COVID-19 pandemic.
The majority of holiday travelers are anticipated to select driving as their mode of transportation. Boehm noted that about 89% of travelers will travel by car, a choice heavily influenced by the significantly reduced fuel prices experienced recently. Currently, the average price of gasoline stands at approximately $2.85 per gallon, a decline from roughly $3 to $4 per gallon that prevailed through much of last year. This reduction makes road trips a more economically attractive option for consumers.
With the elevated travel volume on the roads, AAA is preparing for increased demand for its services. The organization estimates it will provide assistance to over 860,000 stranded motorists during this holiday period, reflecting the high traffic density and inevitable vehicle issues that accompany such busy travel times.
In addition to road travel, airline industry officials have reported new records in passenger footfall, indicating heightened air travel demand this season. While Boehm referenced these unprecedented numbers, specific data was not disclosed during the interview. This uptick in airline passenger volume suggests a complex dynamic in travel behaviors despite the contrasting cost trends.
Air travel, however, faces a cost challenge, as average airfares have increased by 7% year-over-year, according to a separate AAA report issued earlier this month. The average airline ticket now approaches nearly $900, a rise that significantly impacts travelers' choices when compared to the relatively low cost of driving. This price disparity likely contributes to the preference for road travel this season.
Supporting the increased air travel activity, data from the Transportation Security Administration (TSA) projects that the busiest travel day in the current season will be Sunday, with approximately 2.86 million travelers passing through security checkpoints. This figure marginally exceeds the peak travel day of the previous year, which recorded 2.85 million travelers. These numbers denote a robust recovery and strong interest in air travel despite elevated ticket prices.
The positive momentum in air travel is also reflected in the equity market's reaction to leading aviation stocks. Companies such as American Airlines Group, Inc. (NASDAQ:AAL), Southwest Airlines Company (NASDAQ:LUV), United Airlines Holdings, Inc. (NASDAQ:UAL), and Delta Air Lines, Inc. (NASDAQ:DAL) saw minor gains on Christmas Eve amid the holiday travel surge.
Moreover, the US Global Jets ETF (NYSE:JETS), a fund that tracks the performance of major American airlines, has exhibited an 8.68% increase this month. This ETF rate of gain reflects favorable momentum across short, medium, and long-term price trends, signaling optimistic investor sentiment toward the airline industry's recovery prospects within the current travel environment.