Travel recovery slowing in October 2023
Latest Airlines Reporting Corp (ARC) air ticket sales data indicate post-pandemic recovery of travel is slowing or possibly plateauing in October, with both short-term and structural challenges in play.
Positive factors in travel recovery include:
- Return of international travel in Asia-Pacific, particularly long-haul travel on trans-Pacific and Asia-Europe routes, starting in late 2022
- Outbound trans-Atlantic travel from Europe has grown strongly
- Increased demand for blended work/leisure travel, which tends to involve longer stays
Obstacles include:
- Slower-than-expected recovery of outbound travel from PRC, which did not reach 50% of 2019 level until August 2023
- Disappointing growth in US business travel, which was down 27% YOY in February and has increased little since
- Growth in European domestic and short-haul travel flattened in summer 2023
- Global inflation, which has both raised airfares and interest rates
- Production restrictions by oil-exporting countries, leading to higher fuel and air-ticket prices
- Ending of fiscal stimuli
- Pervasive videoconferencing, which has led to work-from-home and hybrid models
- Environmental and sustainability concerns about air travel
- Substitution of road and rail in short-haul markets
Will travel continue to recover in fall/winter 2023-2024? In which markets? Will airfares ever come back down? Watch this space.
