Over 50% of titanium demand comes from the aerospace industry. Because so much titanium demand comes from aerospace, monitoring aerospace demand is an important part of evaluating overall demand for titanium suppliers. Aerospace demand also has significant implications for the wider global economy as the travel and tourism industry accounts for approximately 10% of global GDP. One flight might result in a week of hotel room bookings and many restaurant visits.
The below article will discuss how Google trends can be used to estimate in real time the approximate demand trends for air travel.
Google Trends Introduction
One way to estimate short-term changes in demand for some products and services is Google Trends. Google trends shows on a scale of 0-100 (100 = max volume for the selected time period) search activity volume. There are limitations to using this measurement tool.
First, search activity correlates to air travel but the correlation isn’t 1:1 and the relationship isn’t always consistent. In other words, a 20% increase in search activity for air travel might not necessarily lead to a 20% increase in air travel.
Second, a significant amount of air travel is not connected to search engine traffic. A regular traveler to a specific location, for example, might book air travel without first searching on Google.
Despite these limitations evaluating near-term demand trends likely have some value due to the metrics timeliness. Also, being approximately correct is all that is needed to evaluate trend changes.
Using Google Trends To Estimate Short-Term Demand
COVID-19 related lock-downs have dramatically reduced demand for air travel globally. However, in recent weeks, more regions of the world have started to re-open. Measuring how quickly travel demand returns to normal levels is a key question facing titanium suppliers and the global economy. Florida is an example of an economic region that has recently started the process of re-opening.
The below Florida search volume data for the key word “flight” demonstrates the value that Google Trends provides (100 = max search volume). As seen in the chart, there has been a clear increase in search volume for flights since the state has started to re-open. Currently, search volume for “flight” is right below 50% which is up from just 25% during the state’s full lock down. It remains to be seen how long it will take for volume to return to 50%, 75% and ultimately 100%.
The second chart below shows the same search volume data but for the state of Washington. Unlike Florida, the state of Washington is still in full lock-down mode. And, as you can see, there is no jump in “flight” search volume. This difference further validates the use of Google trends to detect directional changes in economic behavior. Note that it remains unclear how much search volume will translate into transaction volume. TSA checkpoint data will be needed to confirm trend changes. Already, this national data seems to point to some increases in travel from historical lows in April. More on this in future articles.
Ultimately, along with other high frequency metrics, U.S. and global search trends can be used to gauge the degree to which flight demand returns as lock downs start to fade. In future posts, titanium supply drivers will be described in further detail.
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