The outlook for international travel to the United States in the spring and summer looked good. The travel industry, hard hit by the pandemic, has grown steadily over the past year. High vaccination rates, falling COVID infections, falling international quarantines, and the end of many mask mandates have left the impression that 2022 will be the year international travel returns.
Then the invasion of Ukraine happened. The war, creating death, destruction and millions of refugees, shocked the world.
While Kiev is not Paris and Moscow is not Madrid, the war in Europe has apparently put millions of would-be travelers on hold. Higher fuel prices, fewer flights, higher airfares and a plummeting stock market don’t help either.
A new study from MMGY Travel Intelligence examines the impact of the war in Ukraine on the sentiment and behavior of American travelers. MMGY found that war in Ukraine is now twice as likely as COVID-19 to impact Americans’ vacation plans in Europe. The study surveyed hundreds of American travelers planning to visit Europe, with the most popular destinations being Italy, France, the UK and Germany.
62% of American travelers cited concerns about the spread of war in Ukraine to neighboring countries as a factor impacting travel plans in Europe, double (31%) who cited health issues and safety related to COVID-19.
· 47% of travelers want to wait and see how the situation in Ukraine develops before planning to visit Europe this year.
· 50% of respondents said they were concerned about possible flight, train and cruise delays and cancellations, as well as the possibility of border closures.
Clayton Reid, CEO of MMGY Global, said, “Similar to the height of the Omicron variant, we cannot predict how the situation may escalate; but travelers should feel confident to book due to the flexible policies that most airlines, hotels and OTAs have introduced in response to COVID-19. I am also convinced that this hesitation is short-lived and that ahead of the peak European travel season, sentiment will return to much more positive levels.
Similarly, Tim Hentschel, co-founder and CEO of HotelPlanner, said: “Our hearts go out to everyone affected by the Russian-Ukrainian conflict. Fortunately, we do not expect the Russian-Ukrainian conflict to impact the strong resumption of travel we are seeing in the United States and greater Europe. About 90% of Americans still plan to travel within the next six months.
But will violence and uncertainty lead Americans to another summer of domestic travel? The international picture looks murky to say the least.
A war is raging in Western Europe, fuel prices are sky high and travel to destinations like India, Korea and Japan from Europe and the US has already been hit by space shutdowns air. Russian carrier Aeroflot has been banned from the United States, European Union, Canada and other countries. Amid the chaos, United temporarily suspended flights from San Francisco to New Delhi and Mumbai to Newark due to longer flights needed to avoid Russian airspace.
Contested airspace leads to disasters like Malaysian airline MH17. In 2014, a civilian airliner was shot down over Ukraine by Russian separatists with a Russian-supplied missile. To avoid similar disasters (the MH17 caused nearly 300 deaths), Ukraine closed its airspace to foreign airliners. But the airspace over much of Eastern Europe is considered at riskincluding Russia, Belarus, Poland, Slovakia, Hungary, Romania and Moldova in addition to Ukraine.
Flights to and from Russia have been cancelled, of course. But flights from the United States or London to Asia now fly much further south to avoid Russian airspace. Flights are longer and consume more fuel, costs that will be passed on to passengers. Meanwhile, polar flights from the United States to Asia can no longer use Russia as alternate airports, even in an emergency, according to USA today.
Flights that would normally fly over Ukraine or Russia have been delayed and are now longer. Additional fuel consumption from such detours will cost an amount “in the single digits of one million euros” per month according to the European carrier Lufthansa.
“The US market will likely be significantly deterred from visiting Eastern Europe and deterred, although not quite, from visiting Western Europe,” Vice President Olivier Ponti told CNN. analytics from travel analytics company ForwardKeys.
Newsweek says that with route changes and rising fuel prices, the war in Ukraine could increase some international airfares by more than $120 a way. The biggest impact will be on flights re-routed from Europe to North Asia, such as Korea and Japan.
And The Times of India says the impact of the Russian-Ukrainian war will lead to a 46% drop in travel plans due to higher airfares, while the airline could see a 50% drop in revenue from March to May. Rising fuel prices are the ‘spoilsport’ for India travel
Unsurprisingly, airline stocks have fallen as fuel prices rise and destinations shrink. United, Delta and American are all near 52-week lows, while Jet Blue (NASDAQ: JBLU) at around $11.50 per share is flirting with single digits.
A buying opportunity for the brave betting on a rebound? Possibly, although Warren Buffett sold his airline stocks at similar levels at the start of the pandemic. For now, the actions of airlines, the travel industry and international vacations are relatively insignificant collateral damage from a terrible war.