SYDNEY CHICAGO: Global airlines are bracing for more volatility due to the Omicron coronaviruses variant that could force them to juggle schedules and destinations at short notice and rely more on domestic markets where possible, analysts say.
Many travellers have already booked trips for the Christmas period, a peak season for airlines, but there are growing industry concerns about a pause in future bookings and further delays to the already slow recovery in business travel since news of the variant last week.
On Wednesday, United Airlines Chief Executive Officer Scott Kirby said that the new variant will have a long-term impact on bookings.
Fitch Ratings has lowered its global passenger traffic forecasts for 2021 and 2022, saying that the emergence of new variants like Omicron highlight the likelihood that conditions would remain volatile for airlines.
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, said Deirdre Fulton, a partner at consultancy MIDAS Aviation.
The International Civil Aviation Organization ICAO called for a more measured and evidence-based response, saying that the costs of significantly restricted global air mobility affect all countries. Airlines blamed lack of consistent and stable health protocols as well as border restrictions for depressed international travel demand.
New protocols are expected to add to their headache as a result of the Omicron variant.
The United States is moving to require all air travelers to show a negative COVID- 19 test performed within one day of departure.
All non-EU travellers to mainland France, where the Omicron variant has not been detected yet, will have to show proof of a negative COVID 19 test, regardless of their vaccination status, a government spokesman said. Ireland and Portugal are demanding that travellers produce a negative test.
There are a number of apps that are used to verify test results. Delta Air Lines said it would comply with Washington's directives, but did not say if the new testing requirement would require the carrier to make any changes to its verification app.
The impact of Omicron will vary by country and region due to the response of each government and the diverse nature of global airlines, as well as their business models.
Japan Airlines and ANA Holdings have suspended all international flights into Japan until the end of December due to tight border controls.
Hong Kong's Cathay Pacific Airways, which doesn't have a domestic market and is operating at only 10 per cent of pre-pandemic capacity, said it was too early to assess Omicron's impact on demand.
Airlines in countries with large domestic markets, like the United States, China and Russia, are better protected from the greater uncertainties of international travel.
According to an analysis by UBS, US carriers have not yet changed their scheduled capacity, which is 87 per cent of the 2019 levels in December and is expected to reach 92 per cent of pre-COVID capacity in January.
Delta Air expects to have strong bookings over the Christmas period as United Airlines launches its Newark-Cape Town route on Wednesday.
In the past year, a decline in bookings has been brought about by each new variant, but then an increase once the surge dissipates. Helane Becker, an analyst at Cowen and Co, believes that the same pattern will emerge.
Kayak said that international travel searches from the United States were down only 5 per cent on Sunday - a stark contrast to a 26 per cent fall in searches from Britain, which had tightened testing requirements for arrivals.
Major European airlines are more susceptible to a fallout from the Omicron variant because they are more dependent on international travel than their US counterparts.
In Asia, countries such as Australia, Japan, Singapore and Thailand had only begun to cautiously lift border restrictions in recent weeks, and passenger numbers remained at fractions of pre-pandemic levels before the Omicron variant was discovered.
John Grant, chief analyst at travel data firm OAG, said moves by Japan and Australia to delay entry to some foreigners due to Omicron were sad and frustrating but the proportionate impact on travel was relatively insignificant. He said airlines around the world have been more agile about quickly adjusting their schedules and destinations because of the pandemic and that is expected to continue.