Hoteliers in Prague aren’t complaining much out of respect for the human suffering that Ukrainians are enduring almost next door. But the unexpected war has dashed their hopes of a steady recovery following two miserable years of pandemic restrictions. Those hopes rested to a large degree on CEE air travel and the airline sector’s ability to bounce back. So has the war grounded flight ticket purchases to, and within Europe?
Not really. Or to put it more precisely, not nearly as much as the Covid crisis did. That’s the clear picture you get if you look at Europe as a whole.
As of mid-February, ticket sales for Intra-EU & UK international travel were back to 70% of their booming 2019 levels. This is based on numbers collected by the leading specialist analysts at ForwardKeys Air Ticket Data. Those sales fell to just 60% of 2019 levels this February as hostilities broke out. But the fall was just a short blip. Rather than continuing to crater, sales have actually increased slightly through the first week of March. (To be clear, these are figures for the entire EU, not for CEE air travel).
To put this into perspective, by mid-October 2021, Trans-Atlantic ticket sales had risen to nearly 90% of 2019 levels. It was the resurgence of Covid (and then the Omicron variant a month later) that sent ticket sales plummeting: by December 31, they were just 35% of pre-pandemic levels.
But demand began ratcheting up beginning in the new year. And they continued rising right until Russia’s invasion.
For 2022’s Easter holiday, on-the-book arrivals from the UK and the EU were 28% lower than in 2019 as of February 23, as the war began. Remarkably, by March 15, Easter holiday arrivals had improved by 6%. (though no such improvement was seen in summer bookings, where the numbers are still 27% off the pace.)
Covid recovery continues
David Tarsh of Forward Keys says the best way to understand the data is to compare the war’s impact to that of Covid. “What you’ve got is competing influences at the moment,” he says. “The biggest influence is recovery from the pandemic. Or more specifically, recovery from pandemic restrictions because they’ve been tumbling round the world in the last several weeks, led by the UK which is no longer asking for tests.”
“We’ve seen lots of countries drop the need for testing. For two years, people haven’t been able to travel, so there’s huge pent-up demand. Even during the pandemic, we saw a huge tug of war between travel restrictions and the desire to travel. When people were allowed to travel, they did.”
Travel fever is so strong that not even a war on continental Europe has killed off ticket sales from American tourists, who are typically battle-shy. “If we were in normal times, which we’re not, you’d expect war in Ukraine to deter Americans from coming to Europe…The places they have been travelling to until recently has been the Caribbean and Mexico. But as restrictions have come off the Americans have begun flying across the Atlantic.”
Travel fever
His company’s figures show that the airlines continue to add seat capacity for EU arrivals from the United States and that this upward trend will continue right up until the summer season. By June 27, airlines expect to be offering 90% of the capacity for American travelers that they did in 2019.
The larger picture, of course, is still grim, since overall air travel to and from Europe is still massively down from 2019 levels. Not only are Russian and Ukrainians not flying, but China’s giga-market is virtually non-existent, thanks to the country’s no-Covid rules. Even the Japanese are mostly staying at home.
And while overall, we can be cautiously optimistic about Trans Atlantic traffic and inter-European travel, the outlook is far weaker in CEE the closer you get to the Ukrainian border – and the closer politically you get to Russia. As we can see in the chart, international air tickets issued for destinations in Western Europe are less than 10% down from Feb. 24 to March 9. For CEE air travel it’s a different story with Poland, Czechia, Slovakia and Romania’s numbers down 10% – 30%.
Politics matter
But war has hit ticket sales to Hungary even harder, as the slowdown is somewhere between 30% to 50%. Tarsh suggests that the sudden lack of Russian travelers to that country could be having an outsized impact on that country. Georgia, a favorite holiday destination for Russians, is possibly a clearer illustration of that dynamic. Certainly, it’s difficult to ignore the fact that the government in Budapest is, shall we say, less Russophobic.
In the short-term, the damage being wrought to travel-dependent sectors in the CEE region is enormous. The situation for businesses in the center of Prague continues to be dire.
The general consensus continues to be that travel should be back to something like “normal” by 2024 though the war means such predictions are still up in the air.
But Tarsh warns against betting against travel in the long-term. “If you look at the trend growth of travel over the past three or four decades, it’s grown at 3-4% consistently,” he says. “As people become more affluent, they generally want to travel. The world generally is becoming more affluent. Mankind is becoming more innovative productive all the time, so mankind travels more. That’s a pretty strong trend that’s hard to push back on.”
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