An Alternative Data Primer For Airline Investors
It would be fair to say that airlines have had a turbulent 2019. The surge in bankruptcies – affecting Thomas Cook, WOW air, and flybmi – and the grounding of the Boeing 737 MAX have had widespread repercussions. At the same time, certain events can also provide profit-making opportunities. In this report, we summarise how airline investors may utilise alternative data to gain value-additive insights and, in doing so, help manage risk in these turbulent times.
Most readers will likely consider investor presentations, quarterly reports and earnings call transcripts as traditional sources that are able to help airline investors understand operating performance, such as capacity and traffic metrics. However, these sources alone only provide insights on a quarterly basis, and often with a lag time of several months. Additionally, relying on what the company discloses means an investor will not capture other, potentially valuable, performance indicators such as customer sentiment, app downloads, or web traffic.
Alternative data sources can, therefore, be used by airline investors to (1) gain a timing advantage, and (2) incorporate alternative indicators into their analysis.