Quarantine Cruises Half Off: Coronavirus Effect on Travel Industry

The novel coronavirus (COVID-19) is not only causing worry and panic – it is also affecting the travel industry in many parts of the globe. Major airlines and cruise lines are canceling trips, people are getting discouraged to travel, and governments and health experts are encouraging people to stay indoors in countries like China, South Korea, and Japan. “Bookings are down just a little bit, but other areas are making up for that,” said Clay Ingram with AAA.

A report by Waff48 says that “due to travel restrictions and overall fears, fewer people are going to the impacted regions of Asia. This is leading to higher than normal prices into other regions of the world.”

The costs of cruises to ports in Asia are down. Prices have reportedly dropped 70% from $2,000 to $600.

Coronavirus' Effect on the Travel Industry Deepens as Global Emergency Is Declared https://t.co/zyZA3QfrNz

— Skift (@skift) January 30, 2020

The decreased number of flights going to the Asia region has caused a 15% to 20% increase in prices.

On the other hand, Ingram says certain European packages are slightly cheaper. “If one part of the world is not available to them to travel then a lot of times they’ll pick a different part to travel to because they want to go somewhere,” said Ingram.

As airlines cancel routes beyond Chinese territory, they also continue to restrict travel following the spread of the novel coronavirus. Business Insider reported that “the reductions in service are caused by a mix of low-demand and government mandate restricting travel to certain regions. Middle Eastern and Asian countries are among those being the most proactive in attempting to stem the spread of the virus as it finds its way across their regions.”

Airlines that have cut back their services due to the spread of the novel coronavirus include Air New Zealand, Air Seoul, Asiana Airlines, Cathay Pacific, Emirates, Japan Airlines, Philippine Airlines, Singapore Airlines, and its subsidiary SilkAir.

Another report from Business Insider said that the coronavirus is expected to cost the U.S. travel industry more than $10 billion over the next four years, with more than half of that loss coming in 2020. Despite the efforts of U.S. airlines to minimize the impact, “hotels, museums, retail and dining sectors, and other businesses that rely on tourist dollars are expected to face major economic fallout from the outbreak.”

Tourism Economics reported that it expects the U.S. to lose around 1.6 million visitors from mainland China due to the coronavirus – a 28% drop for this year. The expected losses from Chinese visitor spending are at $10.3 billion – more than half of which are expected to occur this year.

RT @rafat: We at @skift have started a liveblog on coronavirus and its effect on global travel industry. This is the biggest impact on travel since financial crisis, and while we've been covering it heavily since late Jan, it needs more dedicated focus: https://t.co/Y18QIxmrHs

— Eric Hippeau (@erichippeau) February 27, 2020

According to Fox Business, global air traffic will be reduced by 4.7% for the year, “Marking the first overall decline in such demand since the financial crisis of 2008 and 2009” – as said by the International Air Transport Association.

“These are challenging times for the global air transport industry. Stopping the spread of the virus is the top priority,” said Alexandre de Juniac, IATA’s Director General and CEO. “This will be a very tough year for airlines.”

Analysts at a U.S. investment bank and financial services company called Cowen noted that IATA might be “underestimating the impact on Asia travel outside of China, noting the recent reports of dozens of cases in South Korea,” reported Fox Business.

“While still relatively small, and too early to tell if it will spread further, we see this as a material negative data point on the global containment of the virus,” the Cowen report said.