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For the first time since the pandemic, leisure and business flights surpass 2019 levels

Global leisure and business travel have reached levels not seen since 2019 for first time since the pandemic.

That’s according to the Mastercard Economics Institute’s third annual travel report, titled “Travel 2022: Trends & Transitions,” published yesterday.

After analyzing 37 global markets, the report found that cross-border travel reached pre-pandemic levels as of March — a significant milestone for a travel industry that has been dominated by domestic travel since 2020.

The data shows a “major recovery” is underway, said David Mann, chief economist for Asia-Pacific, Middle East and Africa at the Mastercard Economics Institute. “It’s just pure evidence that just how strong the demand for pent-up goods has been.”

Flights are back

According to the report global flight bookings for leisure travel rose 25% over pre-pandemic levels in March. The report says that this was due to the higher number of medium-haul and short-haul flights than in 2019.

Long-haul leisure flights weren’t far behind. The report states that after starting the year at -75% levels pre-pandemic, an “unprecedented rise” in international bookings brought these flights to “just shy” 2019 levels in less three months.  

Global spending for cruises and buses rose earlier this year than airlines. According to Mastercard Economics Institute’s 2022 travel report, tourist car rentals exceeded 2019 levels in March.

E+ | E+ | Getty Images

Business flyers, who were followed by leisure passengers throughout the pandemic, are also returning to the skies.

According to the report, business flight bookings surpassed 2019 levels at the end of March for the first time since the outbreak. This is a significant milestone for airlines that rely heavily on corporate “frequent flyer”, passengers.

According to the report, business travel has returned quickly as bookings for business flights were only half of what they were before the pandemic.

Asia: There is a delay

Despite the slow return to Asia, global travel is on an upward trajectory. Asia-Pacific flyers saw an increase of flights to Singapore and Malaysia this year, although most of the top international destinations are outside the region.

Mann stated that 50% of top destinations visited by Asia Pacific travelers during the first quarter 2022 were not in the region, with the United States at number 1.

He stated that “despite the slow recovery of the West, travelers in Asia Pacific have expressed a strong desire return to travel areas where there have been liberalizations.”

If current flight bookings are maintained, 1.5 billion more global passengers will fly this calendar year than in 2021 according to the Mastercard Economics Institute. More than one-third of these passengers will be from Europe.

Will this continue?

According to the report, strong demand for air travel and a rise in global hiring trends are just two reasons why the global travel industry has “more to be optimistic than pessimistic.”  

People have paid off debt at “a record pace” over the past two years, while wealthier consumers — who are “likelier to be traveling for leisure” — have benefited from pandemic-related savings and increases in asset prices, according to the report.  

But rising inflation, market instability, geopolitical concerns in Europe, Asia, and rising Covid-19 prices are all threatening to derail a robust tourism recovery in 2022.

According to the report, incomes will grow in response to inflation. However, this will be faster in developing countries.

The report stated that income growth will outpace consumer prices growth in Germany and the United States by the mid-2023. However, this unlikely to happen until 2024 in Mexico and 2025 in South Africa.

Covid is the most significant risk that could affect travel recovery.

David Mann

Mastercard Economics Institute, chief economist

According to the report, average ticket prices have increased by 18% between January and April this year.

There were significant regional differences in the cost of air travel. Singaporean fares increased 27% from April 2019 to 2022. The report states that flight prices in the United States remained relatively unchanged over the same period.

Mann stated that higher prices won’t be a problem for people who long to travel again. “After we have had some of the release of the pent up demand pressure first, inflation and cost rises will only be relevant.”

He stated that consumers will eventually respond to hikes in travel prices. However, it is more of an argument, and we would argue, for the end 2023.

He stated that it would only happen if the prices are higher.

Uncertainties surrounding Covid

The uncertainty surrounding the pandemic that continues to threaten the travel industry is a bigger problem.

Mann stated that Covid was the most significant risk that could affect travel recovery.

He said that while treatments are improving and many markets have seen successful vaccination rollouts, a severe, contagious variant could force border closures. This could result in a return to the non-linear, stop/start recovery patterns of two years ago.

A last summer hurrah

Whether travel demand will remain robust throughout the year — or whether travelers will take a last summer hurrah before tightening their purse strings — is yet to be seen.

According to the report, people have historically spent less on travel after rising energy and food prices.

The report stated, “However, given massive volumes of pent up demand in a world post-pandemic, this time could have been different.”

Source: CNBC

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