Understanding the Future of Travel

May 2, 2022

Travel and change of place impart new vigour to the mind.

– Seneca, Roman philosopher

Travel is fatal to prejudice, bigotry and narrow-mindedness.

– Mark Twain

One thing that The Economist is renowned for are its surveys. They’re exhaustive, insightful and accurate. When we saw they’d taken a shot at a massive issue like The future of travel – a hot topic given the pandemic-related shocks the industry has been subjected to – we decided to offer up a summary of their findings.

Some of the material we’ve summarized will give you an enhanced understanding of where the travel industry is going in the next few years. We’ve also included some fundamental facts and figures about a global industry that has taken a beating but is recovering. You’ll glean some important pointers about how international travel is evolving through the application of health and safety restrictions.

Finally, this blog is not about where to go and how to get there. It’s about the changing conditions influencing an industry that, until Covid, many of us took for granted.

First, Some Context

According to the United Nations World Tourism Organisation (UNWTO), in 1950 only 25 million people travelled abroad. By 2019 that number had grown to 1.5 billion. Their spending hit $1.5 trillion, which in turn made up 6.5% of global exports in 2019. Travel and tourism accounts for some 330m jobs, according to the World Travel and Tourism Council (WTTC).

Covid devastated this massive industry, closing borders and costing countless jobs. Reports The Economist: “The OECD predicts that tourism will be one of ‘the last sectors to…recover lost demand’.”

The Airline Industry

All airlines face a bleak period – if not a bleak future. Cost-cutting is the order of the day, along with reduced staff and fleets. The Economist predicts only two types of carriers will likely survive:

  1. Those with sound business models and strong balance sheets (Ryanair in Europe, Southwest in the U.S. and AirAsia).
  2. Legacy carriers, propped up by governments. Air Canada is therefore safe.

It’s going to take 20 years for air travel to get back on track.

The Environment

Airlines are polluters. They resist curbing their carbon emissions and some have been known to sidestep regulation. New aircraft technology (more fuel-efficient engines, those bits of kit known as winglets and sharklets, and the retirement of older aircraft) has reduced emissions by 50% since 1990.

Expect announcements of planes powered by biofuels, battery power and hydrogen fuel cells. These advances, combined with fewer aircraft flying, and therefore polluting less, has given the environment some much needed relief. After 2035 most short-haul jets should have net-zero emissions.

Business & Corporate Travel

Corporate jaunts were decimated by the pandemic. Except for those entitled to use executive jets, video conferencing was king. Bill Gates has been quoted as saying: “My prediction is that over 50% of business travel…will go away.”

This may be alarmist, but Zoom, Google Meets, Microsoft Teams, Skype and other video conferencing services will largely replace business travel. Increasing numbers of business travellers are embracing the computer screen as an alternative.

Corporate private aircraft travel – remains strong. “The number of flights undertaken by scheduled airlines was down by 49% in 2020 whereas business flights were down by only 24%, according to WingX, a private aviation data firm,” writes The Economist.

As expected, the mega-rich are leading the charge towards supersonic jets. The Economist declares: “Aerion, an American firm, hopes to have an eight-to-ten-seat supersonic jet on sale by 2025.”

And Elon Musk’s SpaceX is expecting to use its Starship rocket to fly 100 people around the world – New York to Shanghai – in 39 minutes. And all for less than the current price of a business-class ticket.

The Impact of New Health Regulations

International travel will increasingly depend on safety. Not safety of flight, but safety of arrival. And safety considerations increasingly apply to in-flight sanitation. Commercial jets are fitted with a grade of air filter found in hospital operating theatres. The air on board is replaced 20-30 times an hour.

Closed borders and complicated regulations for entry, as Covid-19 ebbs and flows, are impeding recovery. Industry sources suggest that 198 million jobs are at risk if current restrictions remain in place much longer.

Vaccine requirements continue to be confusing, depending on the country of entry. According to The Economist: “A valid vaccination ‘passport’ may become a general pre-boarding requirement. This has led to a flurry of activity to develop digital-health passes. IATA is promoting Travel Pass, a digital health app.”

The IATA Travel Pass provides:

  • Governments with the means to verify the authenticity of tests or vaccinations and the identity of those presenting their certificates.
  • Airlines with the ability to provide accurate information to their passengers on test requirements and verify that a passenger meets the requirements for travel.
  • Laboratories with the means to issue certificates to passengers that will be recognized by governments, and
  • Travellers with accurate information on test requirements, where they can get tested or vaccinated, and the means to securely convey the results/certificates to airlines and border authorities

Health information will become as vital to international travel as a passport is today. And thanks to advances in biometrics, an app will store a person’s credentials, enable recognition, and automatically open boarding gates. Travel will, as a result, become more seamless. Biometrics will enable you to be greeted by name and be served your favourite drink.

Tourism

Reports The Economist: “Such is the stunning growth of tourism that the 72% decline in trips in the first ten months of 2020 merely took international travel back to where it was in 1990.”

Tourism hot spots will continue to be the U.S., France, Italy and Spain. Europe – blessed with historic cities, countryside and beaches – will continue to rule. It consumes 37% of global tourism growth, worth about $619 billion in 2019. Chinese visits overseas – 9 million trips in 1999 to 150m in 2018 – will continue to expand.

While tourism is a resilient industry, it is small business driven. Unlike the big hotel chains, they typically lack the cash to invest in equipment for contactless payments and better hygiene standards – increasingly expected by travellers.

Revenge travel is on the upswing, after the frustrations of quarantines and lockdowns.

Last minute bookings are also on the rise, with people booking on average 13 days before departure. And more flexible re-booking options are being introduced. Expedia introduced “one-click cancellation” – a timely advance.

The Future

Last but not least, some other highlights from The Economist about the future of travel:

  • Travel will return, more broadly than ever.
  • Health will become as central to travel as an airline ticket and a passport.
  • Long-haul fares will likely rise.
  • Many short-haul carriers will go bust.
  • Supersonic travel – for the few – will flourish.
  • Biometrics will make navigating travel restrictions more seamless.
  • The wheelie-bag is here to stay.

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