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Home  >  Travel  >  Air Travel, Stimulus Checks, And Durable Goods
Travel

Air Travel, Stimulus Checks, And Durable Goods

Matthew Klint Posted onMarch 24, 2021March 24, 2021 5 Comments

Air Travel Stimulus Checks

Two stories caught my attention, both relating to air travel demand. First, comments from the United CEO that people are ready to travel because they’ve already bought all the durable goods they need during the pandemic. Second, a surge in domestic travel thanks to stimulus checks. It increasingly appears that airlines received a double bailout from U.S. taxpayers in the form of both direct and indirect aid.

United CEO: Consumers Will Have More Money For Leisure Travel

Speaking at the 2021 JP Morgan Industrials Conference, Kirby said:

“I think that there’s going to be more travel going forward just period. It’s not just pent-up demand…retail spend has been up, but durables are way, way up, and things like travel and leisure are down 70%.

I think all that durable expense that would have been happening in 2022, 2023, 2024 – you’ve already bought a new washing machine, you don’t have to buy another one, people already bought a new car, did a home repair – that money that got spent will pull forward. It is going to mean a lot more available to spend in ’22, ’23, ’24 for leisure demand.”

It’s an interesting observation from Kirby. Lockdowns and more time at home have led to more household expenditures. I’ve used the pandemic to do some necessary work at my own house and I’m sure I am not alone. Just last week I replaced my dishwasher (though my old one was still under warranty) and I do not plan on any major household purchases for the next few years.

While every homeowner knows that there’s (almost) always projects to be done around the house, I’ve addressed most of the immediate needs. Will that translate to more travel?

His theory seems highly plausible to me.

American Spending Stimulus Checks On Travel

My brother traveled to Las Vegas for business last week (his first business trip in more than a year) and remarked at how crowded Las Vegas was.

Sure enough, it seems that people are taking their stimulus checks and heading to Sin City to blow them. Bloomberg reports:

Now data suggest vaccinated Americans are emerging from lockdowns ready to splurge on plane tickets instead of airline stocks. Disneyland beckons along with beach vacations and visits to relatives.

After a year of lockdowns and restrictions, I’d be foolish condemn people for spending their money on travel (but please folks, be sure to keep a rainy day fund and think ahead about your retirement). Nevertheless, the fact that flights are full and Las Vegas is packed suggests there’s something to Kirby’s theory.

It also suggests that airlines not only received a direct bailout from U.S. taxpayers in the form of a third extension to the payroll protection program, but an indirect bailout as consumers are pouring their stimulus checks into airline tickets.

CONCLUSION

I’m genuinely curious if Kirby’s theory will prove accurate. Are consumers done with their household purchases and projects, such that more money will be available for travel? If early signs are any indication, Kirby is at least partially correct.

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About Author

Matthew Klint

Matthew is an avid traveler who calls Los Angeles home. Each year he travels more than 200,000 miles by air and has visited more than 135 countries. Working both in the aviation industry and as a travel consultant, Matthew has been featured in major media outlets around the world and uses his Live and Let's Fly blog to share the latest news in the airline industry, commentary on frequent flyer programs, and detailed reports of his worldwide travel.

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5 Comments

  1. DCJoe Reply
    March 24, 2021 at 2:18 pm

    Durable goods- in multifamily construction there is a significant shortage of appliance availability because of increased demand on the consumer side. It is causing major delays in delivery- 2 months+ in some cases. At some point, yes, that increased demand should tail off, but it hasn’t yet, or not enough to ease the shortages. Some retailers are also putting restrictions on purchases- maximum of 2 appliances per person.

    • Matthew Klint Reply
      March 24, 2021 at 2:19 pm

      That’s a very good point – indeed, I ran into that issue with my dishwasher.

  2. Ben Reply
    March 24, 2021 at 2:23 pm

    Matt,

    It was also the start of March Madness last week, a notoriously busy time in Las Vegas to begin with. I’m not sure that using last week as a baseline for LV is entirely the “new normal” just yet.

  3. Willem Reply
    March 24, 2021 at 2:53 pm

    So I actually spent a whole week (March 7-13) in Las Vegas, pretty recently. I found it to be mostly empty, with 5% of parking at my hotel, maybe 30% of casino tables, and 15% of restaurant seats taken during the week.

    However, the parking figure soared to 60% on the Friday night, and most casinos and restaurants seemed to fill up then. Maybe I just missed a surge in visitors, but although Vegas is crowded compared to what most of us have experienced the last year, it’s far from as crowded as it used to be from my experience.

  4. Santastico Reply
    March 24, 2021 at 3:43 pm

    @Matthew: what is wrong with the “Reply” option on your blog. It is no longer working and all posts just get together.

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