September 2020
The mentions of creating ‘travel bubbles’ to allow passengers, either business or for pleasure, to begin travelling again has never been far from the media spotlight these last few weeks. What are they? How will they work and are they practical? As the world’s aviation industry slowly gets moving Joshua Ng, Engagement Manager for Alton Aviation Consultancy provides an insight to their application.
What are the core elements that a successful travel bubble needs to have to be a viable option?
The overarching criteria for a successful ‘travel bubble’ are firstly, the ability to ensure the safety of the foreign visitor and the local citizen at all times though preventive action(s), and secondly, the ability to mount an effective healthcare response when preventive actions have been compromised.
Preventive actions help stop the spread of a virus and limit its import into the community. Examples include the 14-day quarantines and border lockdowns seen at the onset of the COVID-19 pandemic.
However, as more is known about coronavirus, the tools available in each government’s arsenal have also increased. Preventive actions such as testing have helped identified symptomatic and asymptomatic carriers in the population, while effective healthcare responses; from ensuring healthcare services are tooled up to support a prolonged and enlarged patient pool, to the use of antiviral drugs; have helped increase capacity, and reduced the burden on critical healthcare facilities.
In terms of Australia to New Zealand, Singapore to China, and to those established in Europe, do you think it’s possible to establish a standardized global protocol for travel bubbles, or do you believe that they need to be regionally tailored?
COVID-19 has not affected all regions uniformly – even countries within the same region have had differing outcomes. Political factors such as the ability and willingness to shut down borders early, country demographics and density, as well as individual behaviours have all influenced the impact of the virus.
At Alton, it is our view that we are unlikely to see a global protocol for travel bubbles given that governments have tended to err on the side of caution and are willing to shut down borders to contain the domestic situation. Looking ahead, travel bubbles are likely to be on a bilateral rather than a multilateral basis, as seen by the uneven policy implementation even among EU member states.
The pre-conditions for setting up travel bubbles between governments include mutual trust and respect for the policy mechanisms within each country to prevent, detect and respond to virus waves. In terms of implementation, policy decisions must consider a wide range of factors such as traveller eligibility criteria, implementation as well as wind-down procedures for travel bubbles, and safety and security issues.
The implemented travel corridor between Singapore and China has the following requirements, for example:
- Eligibility: only essential business and official travel is allowed
- Testing: Requires travellers to undergo a COVID-19 test prior to, and after arrival at their destination
- Ports of call: Travelers can start or end their journey only within six defined provinces in China. Notably, Beijing is excluded from this list
- Traveller journey: Prior approvals by authorities, and strict adherence to the approved itinerary
What long term impact do you feel travel bubbles/travel corridors will have on the industry on regional flights?
China, USA, and Japan are the three largest domestic markets globally. Using flight activity as a proxy for air travel demand, we have seen domestic seat capacity increase in China and the US while Japan has maintained a high share of domestic seats despite the pandemic. (see chart above).
The next phase of growth would be regional travel. Countries that are in close proximity with each other are more interconnected and interdependent – they may share similar cultural heritage or have strong economic and trade relationships.
Alton expects that regional traffic will pick up out of that necessity. People will want to travel between countries to visit friends, family, or relatives, or to go on holiday. Cargo and goods will need to be transported for manufacturing, assembly, and export.
The successful implementation of travel bubbles has the potential to add 1.3 billion seats into the air travel market, based on 2019 capacity data. This is equivalent to 44% of domestic seat capacity, 54% of international seat capacity, and collectively with domestic flights represents 82% of all seat capacity.
The mention of a 14-day quarantine upon returning to the UK was initially disliked, then dropped once European governments established specific links. What do you think of this, and will similar practices become more widespread between nations?
It is worth noting that 14-day quarantines were universally adopted globally in the early days of the COVID-19 pandemic as they were seen to be effective in limiting the spread of the virus. Governments have since dialled back these measures depending on the pandemic situation. Cases in the UK peaked two weeks after peaks in Spain and Italy, and it would be natural to expect some lag in the UK’s recovery against continental Europe.
When contemplating a restart of travel, governments tread a fine line between maintaining public safety and economic growth.
Based on World Travel and Tourism Council (WTTC) data, the UK travel and tourism industry contributes 9.0% of total GDP, employs 11% of the total population and earns the country GBP $28.2B in foreign visitor spend. From an economic perspective, travel is an essential foundation for restarting the UK economy.
In the face of an evolving situation, we should expect policy decisions to be fluid and change considering case numbers. If the UK government has the confidence that it can successfully prevent the importation of COVID-19 from foreign travellers, and effectively respond to localised spread, risks are sufficiently mitigated and the travel corridors announced on 10th July may be widened.
Regionally, which areas do you feel with benefit, or suffer from the adoption of travel bubbles in terms of operators in these regions?
Based on our research, the region with the largest potential is in Europe, with the potential to enlarge the market by almost 750m seats. Europe has many countries in close proximity with each other, and coupled with the overarching EU framework, has the ability to coordinate policy between nation states within the bloc. Asia Pacific will also benefit from the adoption of travel bubbles due to the cultural and trade interdependence between APAC countries.
Airlines that primarily serve international routes would certainly benefit from travel bubbles, to regain their primary source of revenues and income. Operators that rely on transit travel, and especially those that have small or non-existent domestic markets, such as Singapore Airlines, Cathay Pacific, or the Middle Eastern carriers, would also stand to gain from such agreements.
