The Omicron variant of COVID 19 could force global airlines to juggle schedules and destinations at short notice and rely more on domestic markets, according to analysts.
Many travellers have already booked trips for the Christmas period, a peak season for airlines, but there are growing industry concerns over a pause in future bookings and further delays to the already slow recovery in business travel.
Fitch Ratings said it had lowered its global passenger traffic forecasts for 2021 and 2022, with the emergence of new variants like Omicron highlighting 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 Deidre Fulton, a partner at consultancy MIDAS Aviation, at an industry webinar on Wednesday.
Omicron's impact 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 international flights to 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% 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 uncertainties of international travel.
According to the analysis by UBS, the US carriers have not changed their scheduled capacity, which is 87% of 2019 levels in December and is expected to reach 92% of pre-COVID capacity in January.
United Airlines is launching a Newark-Cape Town route despite a U.S. ban on non-citizens entering South Africa and Delta Air Lines said bookings over the Christmas period were strong.
In the past year, each new variant has brought a decline in bookings 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% on Sunday - a stark contrast to a 26% 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 U.S. counterparts.
In Asia, countries like 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 that 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. Airlines globally have been more agile about quickly adjusting their schedules and destinations during the pandemic, and that is expected to continue, he said.