The COVID-19 global pandemic has impacted our lives in hundreds of new ways, and developments are changing daily. We’ve had to adjust to a new way of living, as thousands of businesses have come to a screeching halt due to fears about infection and new social distancing standards.
Particularly hard hit is the travel industry, particularly airlines. With passengers staying away from air travel in droves, job losses have reached larger levels, putting overall travel industry unemployment at nearly 51 percent, nearly twice the unemployment experienced in the worst year of the Great Depression. What’s next for the travel industry in the new normal? Will people begin to travel again as lockdown restrictions lift? What is the economic impact of the downturn in the travel industry? Read on to learn more.
Current Economic Impact
The travel industry is a significant source of income all over the globe, with nearly 10 percent of the global GDP coming from travel-related businesses. The World Travel and Tourism Council has predicted job losses totaling nearly 50 million, shrinking the entire travel industry by nearly 25 percent.
Further, there is an expected $519 billion decline in direct travel spending in the United States alone. This translates to a staggering $1.2 trillion loss in the economic output of the travel industry, an impact that is nearly nine times worse than the aftermath of 9/11.
The largest losses are expected to hit the food service industry and the lodging and accommodations sector, with $128 billion and $112 billion in expected lost revenue, respectively. Needless to say, the economic impact of the halting of the travel industry is significant, and the repercussions will likely be felt for several years.
Aid from Congress
The United States Congress approved a $50 billion aid package toward the end of March designed to help preserve the airline industry as much as possible. This aid came as just a small part of the nearly $2 trillion poured into the coronavirus pandemic relief plan, called the CARES Act. Nearly $25 billion came in the form of grants that were designed to keep paychecks coming for those employed by airlines, at least through the end of September. Once that time is up, many airline employees will face losing their jobs, and some airlines may be permanently grounded as a result.
Traffic is expected to achieve just 50 percent of pre-pandemic levels by the end of 2020, and many airlines will continue operating with just a 25 percent passenger load. And keep in mind that the prediction is quite optimistic. It may well be even less than 50 percent by the time the new year comes around. All of these factors will likely combine to result in even more job losses for the airline and travel industries, and potentially some airlines closing for good once the government aid runs out.
The Future of Travel
Many travel experts have begun to predict what travel may look like as governments begin to slowly lift lockdown restrictions and return to some semblance of normality. The vast majority of those in the travel industry believe that a return to travel will likely consist mostly of vacations that are closer to home.
Travelers still report feeling mostly safe in their vehicles, so any return to traveling will likely consist primarily of places that are easily reachable by car, rather than those that require an airplane or another form of mass transit. Additionally, travelers are likely to pass up crowded hotels and resorts in favor of smaller, sanitized vacation rental properties. For the most part, fears about cleanliness and large crowds will drive vacation choices.
The strongest impact on a return to regular travel habits will likely come from the development of a COVID-19 vaccine, the approval of some form of pharmaceutical protocol that would help with the effects of the virus, and reassurance about the safety of travel from reputed medical authorities. Until then, travel will likely be approached with caution, with most people sticking to domestic destinations that are far from big crowds.
When global travel does return, countries that implemented successful policies during the pandemic (like South Korea and Singapore) may see an increased number of tourists, as people are more likely to view these destinations as safe. Cities that have suffered from over-tourism may see fewer tourists over the next several years—and that might be a good thing. A return to tourism could hopefully come with more thoughtful tourists, as well as those that are interested in supporting local communities and are more aware of their destinations.
The travel industry will rebound eventually, but it may take a significant amount of time. For now, we can only be hopeful about the future and look forward to the time we can travel again without fear.