Rising geopolitical tensions

News coverage of the Omicron outbreak was quickly replaced by news of the escalation of the Russian-Ukrainian war, in which Russia launched a full-scale invasion of Ukraine on 24 February. While the situation in Ukraine had a short-lived impact on travel to Europe, it has had far-reaching consequences, the full extent of which is yet to be determined.

In the short term, the rerouting of air traffic to avoid Russian airspace has increased the cost of travel to Asia at a time when several Asian destinations are reopening their doors to visitors. In the medium term, inflation, exacerbated by the conflict, is eroding consumer purchasing power, while rising fuel prices are increasing the cost of air travel. Moreover, the possibility of further outbreaks of violence represents a latent threat to European consumer confidence.

Chaos at airports

It was not long before news of the conflict in Ukraine gave way to a new story: significant delays and widespread cancellations at airports in major Western markets. As a hangover from the pandemic, during which many airports and airlines laid off considerable numbers of employees, chaos erupted in May, on the eve of the summer season, when demand for travel began to outstrip supply. For people planning holidays abroad, the images that dominated television screens during the height of the disruption were worrying, and many were deterred from booking flights.

Slower recovery in Asia-Pacific

Asia-Pacific airports have not experienced the same chaos as those in Europe, largely because the region has taken a more cautious approach to reopening in the wake of the global health crisis and its travel market is recovering at a slower pace as a result.

While China's continued absence from the Asia-Pacific tourism landscape poses a considerable obstacle to the region's overall recovery, other markets have taken bold steps towards full revival based on less stringent policies. Examples include Australia, which began welcoming visitors on 6 July; Indonesia, which opened its doors to vaccinated travellers on 4 February; and Thailand, which removed testing as an entry requirement on 1 April. India, which opened its doors to all vaccinated travellers on 27 March, has made a particularly significant contribution to the region's travel recovery, building on pent-up demand in both the short-haul and leisure segments.

Challenges for aviation

The long-term challenges facing aviation provide a bleak backdrop to the developments and trends that have shaped the travel industry in 2022. These include the aforementioned inflation, which, in addition to threatening to cancel out pent-up demand, is calling into question the sustainability of the low-cost air travel model.

At one point, the business travel market also appeared to be under threat. However, the recovery of this segment has accelerated throughout 2022, catching up with leisure in the fourth quarter of the year. With leisure travel recovering first and now business travel following a similar pattern, it appears that the travel industry as a whole - excluding the Asia-Pacific market - is approaching normality. However, given the other challenges facing the industry, caution is advised.

Arguably the biggest threat to aviation is climate change, with many consumers choosing to forgo air travel to minimise their carbon footprint. As environmental movements gain ground and public awareness attaches increasing importance to green values and practices, the aviation industry must do more to attract the environmentally conscious tourist.

Reasons for optimism

Although this travel year has posed numerous challenges for the industry, there are reasons for optimism as 2023 approaches. The recovery has been particularly strong in Western markets, and several countries in the Asia-Pacific region appear to be following similar patterns. There, as we have already seen in the West, a combination of VFR and leisure is helping international travel to regain the share of demand it lost to domestic tourism during the pandemic.

Asia-Pacific's gradual recovery is positive news for the industry as a whole, and if governments, destinations and airlines can work together to inspire consumer confidence, it is only a matter of time before all regions receive similar numbers of international tourists as in 2019.

Furthermore, the fact that the 2022 World Cup in Qatar will go ahead as planned and fans and athletes will be able to attend without any problems bodes well for a full revival of the travel industry and a further recovery in consumer confidence in 2023.