Travel & Tourism: Looking Ahead

While second, third and even fourth waves continue to make their presence felt across the world, 125 million persons have already had Covid and another 600 million have been vaccinated. From a travel & tourism point of view, later in April 2021, over a billion persons would already be in a kind of cautious, post-Covid situation with most of these being from the top ten nations of the world.

With Spring and Summer around the corners, revenge tourism cannot be far behind, to overcome intense Covid fatigue that the world is currently experiencing.

What is surprising is that global travel bodies like WHO, UNWTO, WTTTC, IATA etc. have not yet combined forces to launch a “Good to Go” travel health pass and used this time to get it approved across most, if not all countries of the world. This would be very helpful in getting the industry to a ‘flying start’, as based upon this, the visa application and issuance process could commence. As the Global Economy strives to return to growth, the travel and tourism industry, which contributes to over 10% of world GDP and an even higher percentage of employment (13 per cent), also needs to participate as effectively as the other sectors. Even as far as India is concerned, the Travel & Tourism sector will need to be supported to rise and shine, if the nation is to get back to double digit GDP growth.

At a global level, Air capacity is currently at 50 per cent of pre-pandemic levels and coupled with seat load factors, the actual traffic is down by about 69 per cent in Americas, 70 per cent in Europe, 75 per cent in MEA and 84 per cent in ASPAC.

India’s new summer schedule will operate at 80 per cent of pre-pandemic capacity, but one hopes at around 75 per cent seat load factor, causing a 40$ decline. On the other hand international inbound and outbound continues to suffer by about double that percentage decline. WFH and virtual methodologies impact will continue to plague Business Travel and Student Travel.

With the rise in losses for airlines, increasing oil prices and the spectre of increasing taxes, travel is likely to get more expensive in the future.

During 2020-21, foreign arrivals into India declined from 11 million passengers in 19-20 to 2.5 million, severely impacting the pre-Covid spend level of 30 billion US$. Most of our inbound tourists (61 per cent) are from long haul markets eg. USA, UK, Australia, EU etc. and 45 per cent of these arrivals are over 45 years of age. If we can get our own Covid numbers under control, this poses a great opportunity. There are around 150 million passport holders in USA, around 60 million in UK, 70 million in Germany, and over 15 million each in Australia and Japan. Also, most of these who are over 45 years of age would be vaccinated by the end of April (eg. Over one third in USA and UK). Our Government Tourism Department needs to be the first “Off the Block” and launch campaigns across these source markets and woo the covid fatigues travellers. Even Israel which has two thirds of its population already vaccinated could be a good source market for us. The results may not be immediate, but if we start soon, over the course of the year, they may be impactful. A few months ago, the EU had put forth an internal “Traffic Lights” approach to travel with categories of Red, Amber and Green based upon Covid cases per 100K population and percentage of tests that are positive. Other countries and agencies have been working on “Travel Passports”, based upon whether persons have been vaccinated, or recently tested negative, or recently recovered from Covid with adequate antibodies. The “Digital Certification” scheme for the vaccinated is in any case extensively prevalent in quite a few countries including India. The UK Government is very actively considering international travel for its citizens which could come into effect as early as 7th May 2021. On the domestic travel front, where over 2.3 billion people travelled during 19-20, we can expect just over half that number, unless quick remedial actions are put into place. Of course, the first step would be to control the numbers of cases across the country and the twin focus on vaccinations and precautions (eg. Masks, social distancing, washing of hands etc.) but since no incentives have been announced for the Travel and Tourism industry as of now, the Government must consider a Tax Holiday for this industry including all its sub-segments viz. Airlines, Hotels, Rail, Road, Cruises, Travel Agents, Tour Operators, OTA’s, Monuments, Museums etc.

As of now, negligible amounts are being collected anyway and critically, no growth is being contributed to our GDP. This step by the Tourism Ministry will help save a lot of SME’s and MSME’s from bankruptcy and save/revive approximately sixty million jobs. It will definitely act as a strong invitation to customers to travel to India and within India. It will act as a huge multiplier for economic activity, will provide a boost to our GDP growth and to some extent, contribute towards reducing inequality. This endeavour, combined with the previous one of a welcoming campaign in our source markets will give us a tremendous “first mover advantage” across the world and help us attract a larger number of the Covid-weary travellers.

With the resilience that this industry has demonstrated time and again, coupled with some Government support, this significant contributor to the GDP and employment can certainly contribute to a strong economic recovery for our nation.