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One of the biggest questions swirling in the travel industry — and the business world in general — is what would the economic recovery in travel look like? Will there be a huge pent-up demand with millions of would-be-travelers cooped-up in their houses for months now, and people will come gushing out, leaving to a V-shaped recovery? That was the initial sentiment early last month amongst many travel prognosticators, something I tamped down on in posts on my social feeds, to some pushback.
But as is increasingly clear all through March and now well into April, with millions and million of jobs being lost and the larger economy very likely to be in a recession — and dare we use the D-word depression here — travel could be in for a muted recovery for the next few years.
I have been saying that for travel/passenger numbers to come even near what they were for 2019, we are looking at a five year recovery cycle, possibly by 2025. And some sectors of travel like corporate travel or MICE travel may never come back to the highs we had before, if our current lockdown work behaviors become permanent or even semi-permanent.
This five-year recovery cycle is based on some previous evidence: for air passenger numbers to come back to Aug 2001 numbers after 9/11, it took until July 2004, according to IATA, almost three years and for the 2008 financial crisis, it took about two years for the equivalent numbers. This is a whole different level of economic, societal and even psychic destruction of the world, and may well take longer.
There are a few mitigating factors here: governments pumping in fiscal stimuluses across economies, timing and effectiveness of a vaccine, effective integration of public health measures with economic activity, and many others.
To understand the possible scenarios, this chart from a very good McKinsey briefing on Covid-19 (PDF link) is a very helpful one. It looks at economic impact and recovery scenarios, but might as well be for the travel economy. After all, if we have learned anything from this crisis, it is that travel is enmeshed with everything that moves this world, literally and figuratively. Travel is the world economy. (Click on this image below to get the full slide)
Depending on how much of an optimist or realist or pessimist you are these days, you can certainly find your recovery shape (yourself?) in any of the A1 to B5 recovery charts here.
I am in the A1-B4 axis, mostly based on the systemic failures we have seen in the Western nations last three months. I would call that realism, to think and plan around a base case, and be surprised and ready if it turns out to be much better than expected.
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