Besides the Obvious

Changes are coming. They have always been coming. What we need to see now is the scope that these will have to travel after Covid-19, the future predictions that we can make with the data we have and the odds on our hands when planning next trips. You can read here more thoughts about the current situation of travelling.

If you are compulsive travellers like us, you will already be thinking about how you will move on the following months and how the pandemic will affect the future of travelling. So far, travellers have been forced to stop in their usual activities. Also, hotels, restaurants, tour operators, airlines and in general all economic activity related to tourism have seen their activity reduced to never seen numbers or directly to zero.

This situation generates a demand on hold waiting to be normalized. The demand is now been accumulated, so all this type of businesses are going to be forced to compete in a hurry between them to capture all that demand at some point, that probably will break into the market at once like a starting shot as when we uncork a bottle of cava. But what will be the consequences of this situation in the short and medium-term? How will affect security measures and dealing with collective fear in travel restrictions? Is all this mess influencing on the prices?

When will we be able to travel?

At the moment there are restrictions in most of the countries for internal displacements. In Spain, the alarm status decreed by the government and the confinement ordered under its coverage is still ongoing. At the end of this April 2020, we have just learned about the population confinement remove plan that is expected to take until the end of June long. Everything suggests that those restrictive measures about internal mobility, at least in Spain and Europe, will be released progressively throughout some months, but this does not necessarily mean that the restrictions on border crossings, land borders and passport controls at the airports of the different states, will go out immediately everywhere equally.

The answer to the question, therefore, would be that it will depend on where we want to travel. Despite the WHO’s recommendations, whatever they may be, the competence to impose immigration restrictions for health or other reasons belongs to the States. Each State can impose those it deems appropriate by attending to reciprocal relations, international treaties or simply unilaterally. It should be remembered here that unfortunately the crisis and the fear that it has produced in the population has helped to justify nationalist regression policies regarding the cross-border movement of people from some governments, whose policies were already in this action line but the present pandemic has helped to accelerate providing a moral coverage. In such cases, part of the restrictions will foreseeably remain among time beyond the health threat, since they were previously desired by the governments that implement them.

In this sense, the best advice is to keep updated with the current real information about the restrictions of the origin and destination countries through the webpages of the different foreign or tourism ministries, which keep such information confirmed and up-to-date. In the case of the European Union, a fairly accurate picture of the present situation of the borders and its current restrictions can be found here.

Will it be more expensive to fly?

For some of us when children to travel was a synonymous of adventures by car or train. Later on, the sky got open to all of us. It was previously untouchable in terms of prices. So we began to make the world small by getting used to crossing it from end to end in a few hours. It had been common to have breakfast in Marrakech, Amsterdam or Kyiv and afterwards to reach Barcelona for lunch. In order to understand if this is going to remain as it was or not we should check some key factors. The cost of petrol, immigration restrictions… but above all, the main point will be what type of client will guarantee the airlines´ viability in economic terms.

Some international airlines have already presented the results for the first quarter of the year and their forecast for the second. Delta, for example, presented a few days ago a fall of 607 million dollars in revenue in the first quarter and a guess of 90% of revenue for this second. Several governments have raised public aid of several billion euros for the main national companies of their respective countries. We are talking about Air France, KLM and other well-known companies. This fact guarantees the short-term viability of such companies, but does not alleviate the uncertainty in the medium term of the sector regarding the possible drop in demand for ticket reservations. The price of oil will drop, but low-cost companies do not think that operate will be possible if some announced prevention measures will be imposed by the different governments. In addition to the fact that some of them have pointed out that those public aids to the sector set up an unfair competition. Ryanair announced to the Irish government that it would not fly with empty middle seats unless the government itself bore the cost of those seats.

This leads us to wonder about future demand and who will get it, if those helped national companies exclusively or will there be part of the cake for the viability of low-cost companies. The business traveller for working reasons usually fill the first-class seats of the national companies, which are the most lucrative for them. But travelling is going to entail in the short term dealing with restrictions and risks that enterprises that in the past used to send workers for reunions in foreign countries may not be willing to assume in the future. For instance, Ryanair and Wizzair have announced the imminent restitution of the operation of the Barcelona – Budapest route, but upon arrival, the traveller must undergo tests that may entail long mandatory quarantines. For reasons like that, companies will foreseeably reduce this working trips and many of those enterprises will surely get used to the videoconferencing method, saving considerable costs at once.

If companies reduce the number of travellers, the sector will depend to a great extent on tourism and this gives low-cost a lot of weight in their role as competitors. This competition tends to lower prices, which means that in the medium term the presumed rise in the price of tickets should be normalized or reverted in such competition by attracting the habitual tourist or compulsive traveller like us. To this we can add up the (temporary) decrease in the price of the fuel.

We ought to recall that the irruption in the market of low-cost companies forced, a little over a decade ago, to moderate the prices of the rest of the companies, which even entered into the low-cost competition by creating their own low-cost subsidiaries or acquiring other companies, as was the case of the ephemeral ClickAir of Iberia and the acquisition afterwards of Vueling. As much as we complain about the conditions and comfort of low-cost, most regular travellers know that there is not much difference between what such companies can offer on a concrete route comparing with low-cost companies offer. At the end of the day, they all fly to your destination. And in the case of low-cost, we ought to admit they helped (for their own interest, that’s true) to democratize access to the sky and to simplify many of the procedures in addition. Remember when the average traveller regretted when Ryanair decided to charge to print out the boarding pass at the check-in desk and now nobody wants to queue for check-in anymore or when people who complained that the boarding of the handbag had an extra cost and now people hide in the queues to avoid their bags being brought to the hold even for free in order not to wait at the destination baggage reclaim belts.

To conclude we think that in the short term it will be a price increase to mitigate the economic losses of such companies, but that offering and demand will return the situation to the starting box in a relatively short period of time if the low-cost companies do not go bankrupt along this way and with them the related industry such as low-cost rental cars, a multitude of low-cost hostels and a long etcetera list.

What is coming to stay?

We have past experiences that help us to understand how these things work. History is extremely useful to understand the present and anticipate the future. We will respond quickly to this question and explain later on the reasons for such a statement with an example.

Supply and demand, as we have explained in the previous section, will regulate, as always in this capitalist system, what the market situation will be. But what will happen to the restrictions? Will they be linked to the health alert or the discovery of a vaccine?

There is no doubt that the lower the risk perception of the authorities and especially the users’ will be, lower the restrictions will be imposed. Now, let us be aware that part of the restrictions that are set in exceptional periods are not reversed when the exceptionality threat ceases.

Let us recall as an example of the prohibition to pass the airport controls with liquids. It came from an investigation that discovered a terrorist plot for attacking with a liquid explosive. Such a scenario was linked to the Al Qaeda attacks worldwide. While it is true that some risks can be avoided in this regard, it is also true that there are many other ways of causing damage on board that cannot be foreseen. In the same way, in some airports, it is easier to pass liquid for contact lenses than in others. Even more, in all airports we can enter to the aircraft with purchased liquids from the airport stores. All of us we have all passed liquids of greater volume than allowed and we have noticed that later when opening the backpack. While there are reasons behind the restrictions, we could wonder why more effective methods of detecting explosives are not implemented to avoid human controller errors. The answer seems simple because it is more economical and above all more lucrative to compel the user to buy the necessary liquids after passing the security control, at higher prices, in shops that in such conditions have very limited competitors.

For this reason, we venture to predict that those restrictions that won’t have an extra cost for those who must impose them, and especially those that generate a business and an associated industry, will become permanent. Like there is now a market of products that included liquids of less than 100ml, an industry of masks (properly approved, such as the vests that we must bring with us in our cars that only can be from concrete brands) or other products could become compulsory. Even more if, that established as mandatory products to travel with, are associated with the prevention of infections and could only be acquired after the security controls to guarantee their sterility. Then, a new industry with very few competitors will appear either if the traveller has to buy them in shops or either if those products will be provided by the flight companies increasing somehow the cost of the flight. Then business will be also taking care of our health. 

What are the alternatives? A short-term future perspective.

In the short term, a scenario of a return to romanticism is foreseen. Which it doesn’t sound too bad. It is very possible that travellers decide this summer (and until the end of 2020 at least) not to complicate with virus checks with or without symptoms, that can leave them stranded throughout the trip that was intended or even worse providing chances of assuming consequences in work and personal life due to the long mandatory quarantines.

It is more than reasonable to think that short-term trips will look inland. They will be introspective and related to the rediscovery of known or nearby places. Proximity tourism as in the old days by private vehicle or public transport is coming. In Spain, digital press advertisements have started to be seen advocating national tourism as an almost patriotic solution for a country so dependent on foreign tourism that won’t come this year. For its part, the hotel sector anticipates that those establishments that can best adapt to offering preventive measures to customers will inspire more trust and obtain more reservations.

Therefore, this summer is going to be a good time to search in the vicinity for a plan that motivates us. Possibly won’t be other choices, even for those like us who are fans of distant and lost destinations. It is time to go back to the 80s, to those now vintage trips with an adventure flavour while we let the wind hit us in the face through the window in the summer sun.

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