Holiday Travel Demand Is Staying Strong. It Looks Immune to Omicron for Now.

Dec 21, 2021

The Omicron coronavirus variety is quickly spreading across the United States, just as the peak travel time of the holiday season begins.

However, there are no indicators yet that the new variant will have a substantial impact on air travel in the United States in the run-up to Christmas.

For the fifth consecutive day, more than two million individuals passed through airport security checkpoints, according to Transportation Security Administration data. The figures have been tracking at between 81 and 85 percent of passenger throughput compared to the same days last year, while the peak holiday travel days are ahead of schedule.

By comparison, the busiest day of the Thanksgiving holiday—Nov. 28—reached 85% of 2019 levels. At the time, the Omicron variation was rarely mentioned.

The TSA anticipates near-pre pandemic levels of travel to continue through December, albeit that estimate was issued on Dec. 7, when the latest Centers for Disease Control and Prevention data showed Omicron accounting for less than 1% of total new sequencing cases. This increased to 73.2 percent in the week ending Dec. 18, according to CDC statistics released Monday.

In an interview with NBC Sunday, President Joe Biden's senior medical advisor Dr. Anthony Fauci said individuals "should be OK" traveling during the Christmas season provided they are vaccinated, boosted, and take care in crowded situations and wear masks.

These statements will definitely instill greater confidence in travelers before departure, but with peak travel days still in the distance and Covid-19 instances fast increasing, the exact amount of the impact on holiday travel demand is impossible to anticipate.

Naturally, given the virus's rapid spread and the requirement for a negative Covid-19 test in many countries, some travelers may be compelled to cancel plans, whether they like it or not.

Carrier confidence

At the moment, it appears as though these US airlines are unconcerned.

A United Airlines (UAL)According to a spokesperson for the airline, more people are expected to fly over the year-end holidays than around Thanksgiving.

Delta Air Lines (DAL) Last week, the company increased its fourth-quarter outlook, citing "exceptionally high" demand during the holiday season. While the primary reason for the predicted increase appears to be lower-than-expected gasoline prices, it is worth noting the robust demand. As is the influence of Omicron, which Delta stated is "limited" in the current quarter. It did, however, note that "bookings have slowed in overseas areas where travel restrictions have been tightened."

Southwest Airlines (LUV) in a statement to Barron's, the company said it is "encouraged" by seasonal demand trends and anticipates "quite standard holiday load factors." An American Airlines (AAL) Domestic demand, a spokesperson told Barron's, is still robust around the holidays, but foreign travel limitations and regulations have had a "dampening effect on demand" in some locations. Between Dec. 19 and Jan. 1, the carrier aims to run an average of more than 5,000 daily flights, with the busiest days being Dec. 20, 22, and 23, with more than 5,300 flights each day. That equates to 86 percent of American's flying schedule for the same period in 2019.

Travel restrictions

Even if the Omicron variation is unlikely to deter the majority of travelers, they may not have a choice in some countries of the globe, as Delta and American indicated.

The fast spread of the virus in the United Kingdom and other regions of Europe, which were already grappling with a Delta coronavirus variant spike, prompted several countries to reinstate travel restrictions.

Germany, Europe's greatest economy, has barred the majority of passengers from the United Kingdom.Only German citizens and nationals are permitted to enter Germany from the United Kingdom, and they must undergo a negative test and two weeks of quarantine.

Germany also has added Denmark, France, Norway, and Lebanon to its list of high-risk countries, although the sanctions will be less harsh than those imposed on the UK. France has likewise prohibited travel to and from the United Kingdom, save for necessary purposes, regardless of Covid-19 vaccination status. Investor concerns Despite the tendency toward tightening travel restrictions in Europe in comparison to the absence of travel restrictions in the United States, both countries' airlines have seen a comparable downturn in recent weeks.

Since Thanksgiving, the Stoxx Europe Total Market Airlines Index has plummeted 10.3 percent, while the NYSE Arca Airline Index has fallen 8.3 percent.

While airlines and vacationers may be oblivious to the Omicron influence, investors are not.

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