Reshaping the Post-Pandemic Travel and Tourism Industry
The pandemic has shattered the travel industry, as Covid-19 puts an ever-increasing stress on the fragile sector. However, with Prime Minster Boris Johnson announcing his plans on the resumption of international flights, many unanswered questions remain. How the industry will evolve and recover against the disrupted workings of a globalised world will be an anchor for discussion.
There is no doubt that the devastation to international travel is like nothing seen before. Prior to the pandemic the number of tourists worldwide had been rising moderately for over 30 years, yet last year the numbers dropped to levels last seen in the 80’s. This is no longer only strenuous on the tourism industry but also the economy as a whole.
One particular and significant sector that is struggling, as a result of this economic stress, is air travel. Huge economic shocks including the September 11th terrorist attacks and the global financial crisis didn’t see air travel fall by more than 3% within the year. On the contrary, the pandemic saw a 66% drop, accentuating the struggles faced by the industry. In sum, it has become progressively difficult to determine when or even if flying is going to recover.
Attempts from the Industry Trade Association conclude that flights could be back at 2019 levels in the next 3 years. Yet the outlook is full of uncertainty and can give seemingly contradictory results, far from providing the clarity needed. Hence, the study only serves to re-ignite the fear in both consumers and firms during such a global crisis.
At the forefront of airline insecurity, is the prospect for long haul flights. Fundamentally, the cheaper economy class seats at the back of the plane are subsidised by business fares. As the pandemic hits cooperation trips hard, the number of international flights suffers greatly.
According to a poll conducted in December 2020, 89% of firms had cancelled most or all international business travel. Although this may pick up, the consensus among most analysts is that around a quarter of these trips, could be gone for good. The framework of financial viability and profitability had wilted, as an increasingly alarming number of long-haul carrier’s bail with state aid.
Given the current economic climate, it is unclear when this money needs to be repaid. Consequently, fares on long haul routes look set to rise meaning fewer people will be able to afford exotic holidays following the resumption of flights.
Despite a rather bleak outlook for long-haul flights, the future for shorter flights looks considerably more encouraging. Many budget airlines, that are not deeply reliant on business fares, are set to make a quicker recovery. Some like Europe’s largest airline Ryanair, have used the pandemic to cut costs further and keep their fares low.
Michael O’Leary, the CEO of Ryanair emphasises the lower labour, fuel and aircraft costs along with the negotiations for discounts from airports. He predicts a busy summer, boosting airline business to levels never seen before. While this ambitious claim would be to the joy of the industry, it is far from the realistic truth. It appears more to do with Mr O’Leary’s famous salesman bravado, shadowing the recent pull of his advert from mainstream TV.
Similar to the travel industry, Covid-19 has had disasterous consequences on tourism. The 75% fall in international arrivals culminates to ten times the shortfall in travel following the financial crisis in 2009. A conventional approach to resolve such shocks would be to arrange large political reform, yet this is a question of how not when.
Streamlining public and private interfaces through tourism could become pertinent for recovery. Coordination between the two sectors would induce clarity and consistency required by the tourism sector in the aftermaths of the crisis. Small changes to policy and methodology such as easing the synchronisation chaos in the UK would be beneficial, as communications between multiple departments hinder efficiency of recovery.
In a world bound by data and computing, analytical information will present a paramount importance when reshaping these industries. Enabling a digital and analytics transformation will allow government to re-examine their roles in providing infrastructure and deal with the problems accordingly. Using data strategies such as the one implemented in Australia can provide better access to customers. The TXA in Australia acts as a matchmaker, connecting suppliers with distributer to craft packages attractive to a particular division of tourist. In this way consumer spending is maximised, providing a benchmark for economic growth.
The pandemic has devastated a multi-billion-dollar industry and the backbone of the globalised world that relies on the freedom of people to move. Building back in the right way could mean both a more seamless experience for traveller and a more sustainable future. With a recovery far off, even with effective vaccines, tourism is sure to be among the last sectors of the economy to recuperate.
However, with record lows of greenhouse-gas emissions, the issue on how to restrain this pollution should still remain the forefront of politicians’ minds. The Covid-19 pandemic will dramatically affect the way in which people move around the world, but rather than driving economic growth a rise in division and inequality is likely to be seen. Nevertheless, the link between developing fortune and the desire to travel will remain uninterrupted and a new travel industry better than ever before will arise.
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Dinil Wanni Arachchige
