Normalcy

Across the world, governments are looking to re-establish normal life, convinced that vaccines will allow the threat of Covid to be practically downgraded to nothing more than a seasonal flu.  

There is also increasing pressure from populations and the travel industry at large, to switch off restrictive practices that are increasingly seen as having little practical value, in restricting the spread of Covid.  

In the southern hemisphere, the previous zero tolerance attitude towards covid-19 now seems to be shifting, as New Zealand and Australian administrations come to realise they cannot stop the virus for ever.  

New Zealand premier Jacinda Arden, whose population has seen a vaccination rate of just 20% to date, appears poised to revise government policy after the delta variant of covid-19 made its way into the country. Lockdowns are now seen as ineffective against a growing number of cases in the country.  

In Australia, another country where long term lockdowns and international isolation was long viewed as the solution to Covid, there is now a growing acceptance that things cannot carry on as they are. Premier Scott Morrison recently announced it will restart international travel from November saying: “The time has come to give Australians their life back. We’re getting ready for that, and Australia will be ready for takeoff very soon.” Initially, Australians will be allowed to travel outbound, so long as 80% of their locality is vaccinated – and will need to home quarantine on their return. Foreign visitors are still awaiting news when they can travel – but at least Aussie airline Qantas is promising to restart international flights from mid-November.  

In Europe, there is growing acceptance that the virus needs to be managed, rather than contained. Sweden, which has taken a different, more lax approach compared with many other European countries, is now seen as having enjoyed significant mental health and economic benefits.  

Irish authorities have announced an end to their hotel quarantine programme, after the country reduced its “red list” to half a dozen countries. Those arriving from countries considered at risk will now be required to quarantine at home, if they cannot provide proof of vaccination or of a negative Covid test.  

The move has led to speculation in UK newspapers that a similar relaxation could be on the way there, with perhaps an end to demands for tests on arrival. 

Elsewhere in Europe, Norway’s government has removed all Covid-related restrictions, 561 days after introducing them. The surprise announcement on 25 September means an end to any restrictions. Prime Minister Erna Solberg declared: “Now the time has come to return to a normal daily life.” 

Following negotiations at premier level between the UK and US, authorities have promised to ease travel restrictions on the valuable – and normally very busy – transatlantic air route. The UK is now accepting US travellers with vaccinations, requiring only a PCR test from them, while the Biden administration has promised to allow UK and European visitors with vaccinations easy access to the US from November.  

The news has already prompted one US airline, JetBlue, to launch new services from New York to both Heathrow and Gatwick airports in the UK. “With a 500% increase in JetBlue’s UK bookings following news of easing US entry requirements for international travelers, it’s clear there is significant pent-up demand for travel between our two countries,” said Joanna Geraghty, president and chief operating officer of JetBlue. “Our Gatwick launch is well-timed to meet the growing number of customers returning to the skies.” 

But analysts point out that a return to previous variety and frequency of services across the transatlantic will depend on the return of business travel. Airlines, still tight for cash, are in no mood to relaunch services if they are going to run less than substantially full.  

In Thailand, the tourism authority has backed development of a new hotel reservation platform. The commission-free service, Locanation.com, also provides a communication system for users, with revenues being used to provide extra bonus features for arrivals.   

Elsewhere, in the Philippines authorities are working to have all tourism workers vaccinated by the end of 2021, in a bid to help revive the country’s tourism industry. The country is likely to ease arrival restrictions for double vaccinated visitors, and is considering following Thailand’s “sandbox” model used in Phuket, for the Philippine island of Cebu.  

HA Perspective [by Chris Bown]: It’s messy, it’s slow, but at least some parts of the world are opening up once again.  

As a highly critical expert from the UN noted in a recent media interview, the world would be in a far better place if pharmaceutical companies stopped mucking about and allowed vaccines, and the IP to produce them, to be shared more widely. With more people vaccinated, the globally significant business of travel and tourism could open up more quickly, and more evenly. 

At least for some parts of the world, there is a feeling that life is returning to some sort of new normal that looks like the old normal. But the old normal is many, many months away – if it will ever come back quite the same. 

Additional comment [by Andrew Sangster]: It is already clear that this is not going to be a normal recovery in the travel industry. The worst looks to be behind us and, almost incredibly, some markets are showing an increase on 2019 levels. 

According to the UN World Tourism Organisation, Mexico recorded a 2% increase in earnings from international tourism in July 2021 when compared with July 2019. Overall, however, 2021 is much worse than 2019. For July 2021 compared to July 2019, globally, there were 80% fewer international travellers. 

Hardest hit is Asia Pacific, down 95% for January to July compared to 2019 levels. Europe was down 77% for this period. 

The rest of this year remains challenging but 2022 looks much stronger. The Middle East shows the most optimism, with a full recovery predicted by the UNWTO’s Tourism Barometer during next year. In Europe, about half of respondents to the survey think there will be a full recovery by 2023. 

There remains a divide on whether business travel will return quickly to pre-lockdown times but there is overwhelming consensus on leisure travel rebound, perhaps sufficiently to counterweight any negatives on business travel. 

In fact, as early as July McKinsey was discussing the forthcoming travel boom and worrying whether companies in our industry were ready. 

McKinsey’s survey data is fairly gloomy: leisure takes until 2023 and business travel back in 2024. My guess – and it is a guess, albeit based on my experience of reading available data – is that it will be quicker, possibly a lot quicker with leisure coming back in full next year and business travel exceeding 2019 by 2023. 

There is lots of noise in the market and it is difficult to avoid reading the data in a way that is free of your own biases. Having switched from bear to bull on the travel rebound, I tend to take heart from the nuggets that support our thesis of a strong rebound. 

One critical aspect of the travel recovery is airlift and there were mixed messages coming out of the most recent IATA outlook given this week. It re-emphasised that Covid “is the biggest and longest shock to hit aviation”. 

Previous downturns – SARS, 1991 global recession, 9-11, GFC – had at worst knocked 20% from global passenger kilometres flown and a recovery within 18 months. Covid lockdowns have seen a hit of more than 90% and still not a full recovery after a year and a half. 

The USD243bn pumped into airlines globally has kept the industry afloat and cargo moved ahead of 2019 by late 2020. Domestic RPKs (revenue passenger kilometres) bounced backed this summer but are now falling again. International RPKs are struggling for take-off from the near total collapse to barely 40%. 

The IATA forecast for 2022 is for domestic RPKs to be 93% and international 44% of pre-crisis levels, with Europe to North America at 65% and Asia Europe at 23%.  

But with my optimism bias, I take comfort from the deliveries of new aircraft. This year will see just about the same number of aircraft delivered in Europe in 2021 as in 2019 (295 versus 297). 

It is going to be a bumpy path back and given how much of an outlier the downturn has been, nobody knows what the recovery will look like. But as a separate IATA survey found this week, there is growing frustration with Covid restrictions.  

The IATA survey found 67% of respondents feeling that most country borders should be opened now, up 12 points from the June 2021 research. This gives me hope that next year will see a proper return to normality as citizens push governments to end all controls. 

Please log in for access

Thanks for subscribing!

An email confirmation will be sent to your registered email address with a link for you to click on to confirm this request is genuine.  Please note that no newsletters will be sent to you until the request is confirmed.  If you do not receive the link, please check your junk folder or else contact NewsTeam@Clanalytix.com.

This website uses cookies to ensure our visitors get the best user experience and to analyse site traffic.  To continue browsing our site, please confirm your acceptance of our Privacy Policy and use of cookies.