Shares in travel companies have been among the best performing stocks over the past six months as investors recognise that more people are flying and falling oil prices raise the prospect of reduced fuel costs.

The cost-of-living crisis does not appear to have prevented consumers from booking their summer getaway, even if the cost of flights or cruises is rising.

The latest results from British Airways owner International Consolidated Airlines (IAG), Jet2 (JET:AIM) and EasyJet (EZJ) saw all three companies beat market expectations and raise their guidance for the year.

A common factor for these travel companies is strong demand for bookings – EasyJet’s package holidays arm is currently 80% sold for summer 2023 and International Consolidated Airlines said it expects its flight capacity to be around 97% of levels just before the Covid pandemic.

Olly Anibaba, analyst at research outfit Third Bridge, commented: ‘British Airways is expected to be the best-performing airline within the International Consolidated Airlines group this year, with transatlantic travel driving revenue growth. The reopening of the Chinese and Japanese markets, coupled with high demand for premium leisure and corporate travel between the US and UK, bodes well for the airline.’

Jet2 said it would beat full-year pre-tax profit forecasts with an estimate of between £387 million and £392 million and it has increased its fleet capacity to meet strong demand.

Not everyone in the airline sector is doing well. In April, American Airlines (AAL:NASDAQ) saw its share price hit after issuing a profit warning, and a month earlier United Airlines (UAL:NASDAQ) also troubled investors by flagging ongoing high labour costs.

In the cruise sector, the news flow has been generally positive. US-listed Royal Caribbean Cruises (RCL:NYSE) recently said customers were booking cruises at higher prices and they were spending more once onboard. ‘We knew that demand for our business was strong and strengthening, but we have been pleasantly surprised with how swiftly demand further accelerated well above historical trends and at higher rates,’ said chief executive Jason T. Liberty.

Carnival (CCL) achieved $4.4 billion revenue in the first quarter of 2023, which represented 95% of pre-pandemic 2019 levels. It experienced the highest booking volumes for any quarter in its history, breaking records for North America, Australia and Europe.

On 1 May, Norwegian Cruise Line (NCLH:NYSE) upgraded its profit outlook after better-than-expected first quarter results. Like Royal Caribbean, it is seeing good momentum with spending beyond the cruise ticket. It is trying to get customers to sign up to more items before they sail, saying this typically results in higher overall spend throughout the journey.

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