The ITIJ team have been reporting from ITIC APAC 2023 in Sydney this week (18–20 June) sharing the discussions that took place at the conference. Read all reports
Dean Long, CEO, The Australian Federation of Travel Agents (AFTA)
To begin the final session Long explained how significant travel is to Australians. “Outbound travel by Australians is Australia’s number one import,” he said. “We spend more money on travel than oil, motor vehicles and electronics.”
In Australia, he said, ‘corporate is well and truly back’ after showing strong recovery signs early on, particularly in domestic markets – leading to a massive increase in domestic airfares.
Another market to recover was visiting friends and relatives (VFR). Throughout the pandemic, people missed out on significant life eventsthat required travel.
However, the price impact in these two markets hasn’t been seen as significant, due to their compulsory nature. But for holidays, the inbound travel to Australia and outbound travel to the rest of the world are yet to recover. Long said that this market is more affected by increasing interest rates.
Pre-pandemic, the spend on travel for Australia consistently sat at six to seven per cent of GDP, with other events not affecting it over the years. Long said: “Discretionary spend on travel by Australians is not discretionary.” However, Covid-19 and border closures led to expenditure dropping to around three per cent, with the level increasing now but not recovering completely.
Long then asked if Covid-19 still having an impact on travel now. In terms of travel insurance, he explained that 70 per cent of all claims are for cancellations due to Covid-19 and not health-related – for example, a passenger tested positive, cancelled flight and then claimed on insurance.
Cruise travellers in Australia continue to be affected though, as the federal government stipulates testing is still required before embarking.
What is affecting Australians is ticket price. In 2019, the average international ticket price was $879. In 2022, it was 54 per cent higher and so far in 2023, it is 58 per cent higher than pre-pandemic. But for the first time, he said, there is a downward pressure on international air tickets.
However, air capacity is still reduced, with the APAC region being at -38.8 per cent, due to China and its border restrictions. Domestic travel within China though ‘is back’, with capacity sitting at -3.3 per cent.
To conclude, Long noted:
- Travel is still recovering and will not achieve 2019 levels until 2025
- Air capacity is driving the significant increase in prices
- Countries that had limited lockdowns recovered more quickly.
Ian Allsop, Insurance & Partnership Director, ANZ & Pacific, International SOS
Allsop started by presenting the findings from the Risk Outlook 2023 report. Eight out of 10 respondents anticipate travel risks to increase or stay the same. He then highlighted the differences between regions worldwide. The levels in Europe (90 per cent) and Americas (80 per cent) were much higher than those in Asia (71 per cent) and Africa (64 cent), since the European and American markets have been open for two years. Allsop said: “As far as they’re concerned, they’re back to normal.”
International SOS also identified the different types of travellers and their travel intentions. “In Australia, intent from students and faculty to travel has been far outpacing any other market in the region”.
In terms of resuming travel, specifically business travel, it is a case of weighing up travel budgets against travel risks. Allsop reported that 86 per cent of respondents expect their budget to support the health and safety of their travelling employees to stay the same, while 83 per cent expect health and security risks faced by their travellers to increase or stay the same – the highest since asking this question in 2014.
However, a key insight was that the perceived risks are different to those in actuality. Travellers are concerned about security threats; geopolitical threats; and transport concerns but Allsop explained that for every security incident, International SOS has 3.4 medical incidents or health incidents. “Health is more prevalent than what people are conscious about,”.
The current global health risks, therefore, are:
- Unaddressed and neglected communicable and non-communicable disease
- Risk-based return to office and return to travel processes
- Climate change and energy transition
- Rise of mental health and wellbeing as a business driver
- Expected increase in health compliance requirements – which is now being legislated for in Australia.
To finish, he looked at the modern hybrid workforce. Focusing on who the duty of care belongs to for remote workers, most respondents said it was on the individual in all situations – office, remote or abroad – to take some responsibility. Allsop explained their attitude to be: “I expect them to look after me when I travel but when I’m in the office it’s all on them [employer], even though I have some responsibility.”
This ability to work remotely or as a digital nomad is ‘reflective of different regions post-Covid’, concluded Allsop.