We recently published a list of the 10 Worst Airport Stocks to Buy. In this article, we are going to take a look at where Japan Airport Terminal Co., Ltd. (OTC:JAIRF) stands against the other airport stocks to buy.
Air travel plays a significant role in the global economy as it directly contributes to economic growth by facilitating trade and tourism. The aviation industry generates millions of jobs worldwide, both directly and indirectly.
The industry was hit quite hard by the pandemic and later the Russia-Ukraine conflict. However, it has experienced a remarkable resurgence in passenger demand, which is surpassing pre-pandemic levels and signaling a strong recovery for the aviation industry.
Bain & Company forecasts reveal that annual air travel demand is on track to exceed pre-pandemic levels, specifically measured by revenue passenger kilometers (RPK). By 2030, the global RPK is expected to reach 11.4 trillion, which represents 136% of the 2019 volume.
Moreover, the Airports Council International (ACI) World released its 2024 Annual World Airport Traffic Report on September 19 where the council compiled data from over 2,700 airports across more than 180 countries.
The council forecasts a 10% increase in global passenger traffic for 2024, at approximately 9.5 billion. In 2023, passenger traffic hit 8.7 billion, representing a 30.6% increase from 2022 and recovering 95% of pre-pandemic levels.
For 2024, the passenger numbers are expected to exceed 4% of pre-pandemic numbers. Data from the first half of 2024 shows an 11% year-over-year increase in passenger numbers, as international travel increased by 17%. The report projects domestic travel will account for 5.4 billion passengers, while international travel is expected to reach 4.1 billion.
Artificial Intelligence: Transformative Trend In Airline Industry
Using AI in the airline industry marks a significant change toward improving efficiency and customer satisfaction. It shows how technology can make services better while still keeping the important human touch in operations. We discussed this in our article about 11 Worst Aviation Stocks to Buy According to Analysts. Here is an excerpt from the article:
“Like most industries of today, airlines are also implementing AI to improve the efficiency of their operations. According to an August report by CNBC, these companies are using AI for tasks like ground control, customer service, and optimizing flight routes.
American Airlines introduced its AI-powered “smart gating” system at its Dallas-Fort Worth control center. The tool automatically assigns gates to incoming flights, which cut runway taxi time by around 20%, or two minutes per flight, across five airports. The system also helps passengers, baggage, and crews make quicker connections, which improves overall efficiency.
Alaska is using AI to streamline flight paths and optimize aircraft turnaround times at gates. Its tool is described as “Waze for the skies,” and it uses AI to plan faster routes, which saves fuel and reduces delays. Additionally, the system monitors ground operations as it tracks when fuel, catering, and baggage trucks arrive and depart, which allows agents to address delays immediately.
United has implemented generative AI for customer service, especially during flight disruptions. The AI generates detailed, empathetic messages explaining delays, which has increased customer satisfaction by 4% since its rollout on 6,000 flights.”
Moreover, the report by CNBC stated that AI will not be significantly replacing human labor. Instead, it will help humans work more efficiently.
Our Methodology
For this article, we used the Yahoo Finance stocks screener along with ETFs and online rankings to identify over 20 airport or airport related stocks. We narrowed our list to 10 stocks with the lowest average analyst price target, as of September 26. The stocks are listed in descending order of their average price target. We also added hedge fund sentiment around the stocks that trade on the NYSE and NASDAQ, which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Japan Airport Terminal Co., Ltd. (OTC:JAIRF) One of the Worst Airport Stocks to Buy?
Japan Airport Terminal Co., Ltd. (OTC:JAIRF)
Number of Hedge Fund Holders: N/A
Average Analyst Price Target Upside: 24.37%
Japan Airport Terminal Co., Ltd. (OTC:JAIRF) is a prominent player in the airport sector, focusing on the construction, management, and upkeep of passenger terminals and airport infrastructure. The company oversees key airports including Haneda, Narita International, Kansai International, and Central Japan International airports.
The company provides a variety of products and services for the needs of airport customers. Its core business operations include managing terminals, parking facilities, duty-free shops, lounges, and travel assistance. Additionally, it supplies materials and equipment for use in passenger terminals and organizes bonded art auctions.
Japan Airport Terminal (OTC:JAIRF) has outlined a medium-term business plan, “To Be a World Best Airport 2025,” which covers FY 2022 to 2025. The plan aims to support its long-term vision of becoming a leading airport focused on advanced, eco-friendly, and customer-centric services by 2030.
The new plan emphasizes sustainable growth for both the company and society, with a focus on adjusting operations and preparing for a rise in air traffic, in line with Japan’s target of attracting 60 million annual inbound travelers by 2030.
Japan Airport Terminal (OTC:JAIRF) is 8th on our list of worst airport stocks to buy as its average analyst price target of $42.88 implies a 24.37% upside to the company’s stock, as of September 26.
Overall, JAIRF ranks 8th on our list of the worst airport stocks to buy. While we acknowledge the potential of JAIRF as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JAIRF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.