U.S. Airline ETF Significantly Outperforms S&P 500, Reclaims Pandemic Losses for First Time in Six Years
Miles Bennett
The US Global Jets ETF rose 4.2% Wednesday to its highest close since December 2018, fully recovering its pandemic-era plunge for the first time in six years — driven by oil falling below $75 a barrel on US-Iran talk progress — but consumer-side cracks and a stark long-term lag behind the S&P 500 temper the rally's meaning.
How big is this rally, really?
JETS gained 4.2% Wednesday and extended gains Thursday; year-to-date it is up roughly 20%, well ahead of the S&P 500's 7.9%.
But zoom out: from late 2019 to now, JETS has returned only about 3% total, while the S&P 500 surged nearly 128%. This means → the airline rally is a hole-filling exercise, not wealth creation — six years and barely ahead of inflation.
In plain terms = six years on a roller coaster, just back to the starting gate. S&P 500 passengers cashed out at double long ago.
Why is oil the airline sector's lifeline?
US-Iran diplomacy pushed oil below $75 a barrel. Fuel is one of airlines' single largest costs; a drop flows almost directly into wider margins.
Analyst Bret Kenwell at eToro: "Airlines have the highest oil-price leverage in the travel sub-sector — falling oil gives them the biggest margin upside."
This reflects a structural reality: airline stocks are essentially a reverse oil-price lever — oil down, they rise; oil up, they fall. Their own pricing power is limited.
Has the industry pressure really faded?
During the Middle East conflict's oil spike, carriers raised fares, cut routes, hiked baggage fees, and grounded older jets. United and American both lowered full-year guidance last quarter on rising fuel costs.
The consumer side is also strained: US savings have been drawn down, credit-card balances keep climbing, and absolute price levels remain high. Analyst Mark Malek warns: "I worry consumers are quietly struggling and nearing a tipping point."
Consumer confidence has ticked up slightly but still hovers near historic lows. This means → oil has eased the cost side, but the demand-side cracks have not been repaired.
Can premium travelers hold up ticket prices?
Delta and JetBlue both say passengers continue to pay for lounge access and premium cabins. United CEO Scott Kirby notes that affluent travelers show little pullback despite fares rising roughly 20% this year.
Budget carrier Spirit Airlines' bankruptcy removed a low-price competitor, shifting its passengers to other airlines and helping sustain fare levels.
In plain terms = wealthy flyers keep flying, and a price-cutter has left the market — so fares have a floor for now. But that only props up the premium end; mass-market consumer pressure remains.
What comes next?
Delta reports Q2 earnings on July 10, the first hard-data checkpoint of this earnings season.
Bloomberg analyst George Ferguson expects that lower oil plus trimmed Q3 flight schedules mean "Q3 could be quite strong — and that will show as airlines report over the coming weeks."
The core variable is singular: whether oil stays low under the diplomatic framework. This means → the airline margin recovery is not self-earned — it is borrowed from geopolitics. If talks falter, the thesis reverses.
Content is for reference only, not financial advice.