Of all the industries that have been ravaged by the 2020 SARS-CoV-2 pandemic, the travel industry is perhaps the biggest loser. Easy, relatively cheap international travel was, in many ways, responsible for how uncontrollable the 2020 global pandemic was, as large masses of people spread the virus around the world completely oblivious during the latter months of 2019 and the beginning of 2020.
While domestic travel in the United States and a select few other places around the world has been rebounding for several months now, and major destinations like Miami and Los Angeles are starting to see rebounds, most domestic industries remain shuttered while international travel remains heavily restricted, from Europe to Canada to Latin America and Asia.
International Losses
COVID-related travel and tourism losses in 2020 were more than $750 billion, felt most harshly by the top 50 countries around the world that most support the global tourism industry. These were the numbers as of February 2021, with the real numbers likely to be far higher as we find out more about how truly devastating the impact of the pandemic was on travel. In the United States, COVID and widespread social unrest contributed to a 36 billion dollar loss to international tourism revenue.
It does not look like a return to normal will be possible during 2021, with tighter restrictions due to third and potentially fourth waves and countries around the world making unequal progress in the fight against the virus. In short, the travel industry is on track to have another devastatingly abysmal year, with national airlines likely having to continue to layoff employees and ask governments for subsidies, bailouts and handouts.
Opportunities
Many domestic travel industries, in places like the United States as well as in Latin American countries like Colombia and Mexico, have started to see marked increases in the number of people travelling domestically over the last few months, and the indications, based on surveys and poll results, suggest that people are going to continue to travel more domestically as vaccination becomes widespread.
U.S. domestic travel is expected to fully normalize by 2022, with full recovery taking place sometime early next year. Consulting firm Oliver Wyman contends that the domestic travel industry in the United States is actually recovering faster than expected, thanks in large part to the comparatively fast vaccine program rollout around the country.
Leisure trips–those where people travel to visit friends and family–are also predicted to fuel the travel industry’s recovery. Business travel, on the other hand, will take much longer to fully recover, as the return to in-office work takes place slowly and, in many cases, in dramatically reduced fashion and perhaps not at all.
New Travel Realities
What we are likely to see over the medium-term is a large increase in ticket prices as airlines continue to take on staggering levels of debt and business travel (which factors heavily into airline pricing models) heavily decreases. The airline industry already amassed some $180 billion dollars in debt in 2020, which represented more than 50 percent of total combined annual revenue.
Debt levels will continue to rise, credit ratings will worsen, and financing costs will go up, all of which will likely be passed onto the consumer. Governments around the world will have to take on larger roles in domestic aviation and airlines, perhaps in some cases taking them over entirely.
Vaccine Passports
A return to easy, carefree travel for all is likely out of the question for some years still, but many people (i.e., those who have been vaccinated) may well be travelling semi-freely by the end of 2021. So-called “vaccine passports” –little electronic chips that become part of our travel documents, certifying we have received one of the several COVID-19 vaccinations on the market–could become a travel reality post-pandemic. There are already mixed feelings about such a reality, with some insisting it is the only practical way forward while others lament the inherent discrimination and unfairness.
Liberal countries around the world with strong traditions of personal freedom are likely to have this debate out over the coming months and perhaps even years, while more authoritarian and, in many cases, countries with much more fragile healthcare systems and economies are likely to adopt and impose the vaccination passport requirement from the beginning.
Conclusion
The travel industry is not dead, but it will take some time, and perhaps many years before it has regained the considerable ground it lost in 2021. In the meantime, what travellers will be forced to contend with is a much-diminished industry, with struggling airlines trying any which way they can to recoup losses and claw their way back to profitability, while countries around the world, as well as transit and airport authorities, continue to make the travel experience very post-9/11 like.
Domestic leisure travel in places with the highest vaccination rates will resume quickest, and those with vaccination passports will be granted first and unequal access to the world as things start to slowly and painfully open up.
