Omicron a speed bump in aviation industry’s recovery path
December 01 2021 05:38 PM
Travellers wait to be admitted into the Covid-19 test centre at Schiphol Airport in Amsterdam.
Travellers wait to be admitted into the Covid-19 test centre at Schiphol Airport in Amsterdam. Global aviation and tourism industries were looking eagerly towards 2022 for a meaningful recovery, but their hopes seem to have been dashed following the recent discovery of the Omicron coronavirus variant.

Beyond the Tarmac
Global aviation and tourism industries were looking eagerly towards 2022 for a meaningful recovery, but their hopes seem to have been dashed following the recent discovery of the Omicron coronavirus variant.
Airlines are scrambling to limit the impact of the latest coronavirus variant on their networks, while delays or cancellations in bookings are threatening an already-fragile recovery for global tourism.
The Omicron variant has sparked a global spree of travel bans and restrictions in recent days on international arrivals from several African countries.
Some countries are cancelling flights entirely from several southern Africa countries, while others are imposing new quarantine restrictions on travellers arriving via certain destinations.
Although the World Health Organisation (WHO) and global leaders including US President Joe Biden have labelled Omicron a “variant of concern”, they were quick to stress it was not one to panic about.
“But it is already evident Omicron is a speed bump in the travel industry’s recovery path,” according to leading market researcher Skift.
Clearly, the latest outbreak has dealt a blow to the industry just as it had recovery in sight, especially following the easing of US-bound travel.
Multiple countries including Japan, the United States, Britain, Israel and India have imposed travel curbs in order to slow the spread of the new variant.
"The hope for US and European carriers had been that opening the Atlantic would allow them to operate long-haul routes on a cash-positive basis, but border restrictions make it even harder to get the demand in," James Halstead, managing partner at consultancy Aviation Strategy told Reuters.
A pickup in long-haul traffic is seen critical for many cash strapped airlines, which have been left with severely strained balance sheets following the plunge in air travel last year.
Southern Africa accounts for only a tiny portion of the world's international travel, but Reuters noted “sudden border restrictions and route suspensions have left some carriers with an uncertain future.”
Rising Covid-19 cases as well as the new border restrictions have prompted analysts to adjust their industry outlook. Analysts at HSBC, for example, expect the industry's recovery would be pushed back by a year.
Undoubtedly, it is a setback for companies including the interconnecting GCC carriers and Lufthansa, which depends heavily on transit traffic at its Frankfurt base, analysts said.
Big carriers acted swiftly to protect their hubs by curbing passenger travel from southern Africa, fearing that the spread of the new variant would trigger restrictions from other destinations beyond the immediately affected regions.
Even though it is early days in being able to predict how the new variant will impact the world, Skift says Omicron is another reminder government response — overreactions, some say — can throw off a hotel recovery many saw as finally just getting global momentum.
“Government overreaction and government interference in travel is going to be the long-lasting legacy of Covid, and I think that is a bit of what we’re seeing this time around,” said Richard Clarke, a managing director covering global leisure and hotels at Bernstein.
Ironically, new but targeted travel restrictions have been imposed a few days after the reopening of many international borders.
For example, the US once again allowed the entry starting in early November of vaccinated foreign travellers from some 33 countries, including South Africa.
According to Skift, the hotel industry widely viewed this move as a crucial step in the recovery of properties in major cities that counted on international travellers filling up guest rooms.
“Travel restrictions were once seen as a much-needed mitigation strategy against the spread of the virus, and some argued for earlier government action in sealing off borders. Closed borders were one of the few tools at the disposal of governments before the rollout of vaccines and booster shots,” the market researcher said.
Following the recent emergence of the Omicron variant, IATA's Director General Willie Walsh said, "Governments are responding to the risks of the new coronavirus variant in emergency mode causing fear among the travelling public.
“As quickly as possible we must use the experience of the last two years to move to a coordinated data-driven approach that finds safe alternatives to border closures and quarantine. Travel restrictions are not a long-term solution to control Covid variants."

Pratap John is Business Editor at Gulf Times. Twitter handle: @PratapJohn



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