Daily Management Review

Preparations Being Made By Global Airlines For Industry Volatility Related To Omicron Variant


Preparations Being Made By Global Airlines For Industry Volatility Related To Omicron Variant
Airlines across the world are prepared for a new wave of volatility in the industry as a result of the Omicron variant of Covid-19, which according to analysts, could compel them to change flight schedules and destinations on international routes at short notice and rely more on local markets for business.
Many travellers have already booked flights for the Christmas season, which is a busy time for airlines. But the industry fears about a slowdown in future reservations and further delays to the already slow recovery in the travel business travel.
Fitch Ratings has cut its global passenger traffic predictions for 2021 and 2022, citing the advent of new variations of the coronavirus such as Omicron as evidence that airline circumstances would remain uncertain.
"It feels a little bit like we are back to where we were a year ago and that's not a great prospect for the industry and beyond," Deidre Fulton, a partner at consultancy MIDAS Aviation, said at an industry webinar on Wednesday.
Because of the diversity of global airlines and their economic patterns, Omicron's influence will differ by nation and area.
Concerns that the new variant might spread beyond the local afflicted regions, airlines in the Gulf hub rushed quickly to protect their hubs from infections by restricting passenger travel from southern Africa.
Airlines in nations like the United States, China, and Russia that have huge, strong domestic markets are better protected against the more unpredictable nature of international travel because of the pandemic and the emergence of variants.
According to a UBS research, US airlines have not adjusted their scheduled capacity, which was 87 per cent of 2019 levels in December and is likely to reach 92 per cent of pre-Covid-19 capacity in January.
Despite a US restriction on non-American citizens entering the country from South Africa, United Airlines is beginning its Newark-Cape Town service on Wednesday, and Delta Air Lines reported solid holiday reservations.
"In the past year, each new variant has brought a decline in bookings, but then an increase once the surge dissipates. We expect the same pattern to emerge," said Helane Becker, an analyst at Cowen and Co.
International travel searches from the United States were down only 5 per cent on Sunday, according to trip booking service Kayak, compared to a 26 per cent drop in searches from the United Kingdom, which has tightened immigration testing norms.
Major European airlines rely on foreign travel significantly more than their American counterparts, putting them at greater danger from the Omicron variant.
On Tuesday, easyJet CEO Johan Lundgren indicated that short-term departures have been impacted, but not to the same extent as when limits were imposed earlier during the height of the pandemic.
In Asia, nations including as Australia, Japan, Singapore, and Thailand had just recently begun to loosen border controls, and passenger numbers were still fractions of pre-pandemic levels before the Omicron variant emerged.
Moves by Japan and Australia to postpone entrance to people form certain countries owing to Omicron variant infections were "sad and frustrating," said John Grant, chief analyst at travel data firm OAG. He however said that the proportionate impact on travel because of the new restrictions was "relatively insignificant".
During the epidemic, airlines around the world have been more flexible in altering their schedules and destinations, and this trend is anticipated to continue, he added.