The recent rise in xenophobia across the world due to the coronavirus from China brings me to an uncomfortable but necessary discussion about American Airlines (NASDAQ:AAL) and AAL stock.
Let me be 100% clear: I love American Airlines. They’re a great company. Frankly, the chill that has fallen on the airliner industry can be replaced with any other name, such as Delta Air Lines (NYSE:DAL) or United Airlines (NASDAQ:UAL). Understandably, very few travelers want to fly for infection fears as well as the possibility of coerced quarantines.
But for AAL stock and the entire airliner industry, the most worrying aspect is rising bigotry toward Asian communities. This is not just a perceived threat. According to The Guardian, Americans of all persuasions have rushed to buy guns. Notably, though, “in Washington state and California, locations of early outbreaks of the virus, gun sales increased acutely propelled by Asian Americans fearful that they could face xenophobic and racist violence against their families given that the original source of coronavirus was China.”
Unfortunately for Asian Americans, this is becoming a new normal. Just a few days ago, a 19-year-old man named Jose Gomez admitted to stabbing an Asian father and his very young son because of their heritage.
This absurdly hateful crime occurred in Midland, Texas. How many Asian Americans are going to go to Texas now?
As social and racial tensions spiral out of control, how can investments like AAL stock thrive?
The Coronavirus Isn’t the Biggest Challenge for AAL Stock
Racism against the Asian community is coming from all angles. This places extraordinary strain on an prospective travelers within the community. And this demographic plays an extremely important role in the travel-based economy.
Financially, if social tensions don’t die down soon, the U.S. risks losing the billions of dollars that Chinese tourists spend. And what about Japanese, Korean, Filipino, Thai and other Asian tourists? That could add up to serious money that the American economy cannot afford to lose right now. Obviously, the heightened social tensions don’t bode well for AAL stock and its ilk.
Furthermore, what I’m talking about isn’t without precedent. During the time when terrorists wreaked havoc on Paris, France, tourism numbers naturally dropped. However, they were most pronounced among the Chinese and Japanese, which saw declines of 21.5% and 41.2%, respectively.
Cynically, one can counter that terrorism targets everyone with equal hatred. But now imagine what impact directed and specific racism against people who “look Chinese” will have on tourism?
Logically, this will impose a huge headwind against AAL stock and similar investments.
Trump Can Help Us
Admittedly, these risks to airliners and the broader travel industry will decline if this crisis ends quickly. Fortunately, we have not seen anyone lose their life over the violence.
But because bigotry — like the coronavirus — is accelerating rapidly, President Trump has a moral obligation to heal these wounds. Very easily, he can invite Asian American community leaders to the White House and shift the narrative positively and constructively.
I realize that the President must prosecute the U.S.-China trade war. Further, he may hold China accountable for spreading the coronavirus. In my opinion, he should perform these high-level tasks with vigor.
However, in this incredibly heightened time, Trump can introduce some nuance to the discussion: yes, we can hold China accountable while separating and shielding innocent Asian Americans from the political vitriol.
But how likely is it that the President will assume leadership of this growing crisis within a crisis? I concede I’m not very hopeful. Until that time comes, you’ll likely see an inverse relationship between gun sales and airliner bookings.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.
