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Omricon Wreaks Havoc on Holiday Travel; Will It Stall Business Travel Recovery? - BTN

January 05, 2022 9:24 AM | Morgan Christopher (Administrator)

More than 4,400 flights were cancelled worldwide on Sunday Jan. 2, according to flight tracking website Flight Aware, dashing pre-holiday hopes for smooth travel going into 2022. With the Covid-19 omicron variant now bearing down hard in the eastern United States and throughout Europe, more than 2,700 cancellations affected flights into, within or out of the U.S. yesterday.

The cancellation miseries began in earnest on Christmas Eve. Globally, airlines cancelled more than 6,000 flights over the Christmas holiday weekend—Friday, Saturday and Sunday—with more than 1,700 into, within or out of the U.S. But midweek cancellations continued, with airlines cancelling 1,082 flights into, within or out of the U.S. on Wednesday, Dec. 29 and 1,125 on Thursday, Dec. 30. 

While omicron was not the only factor contributing to cancellations—there were weather issues as well—staff shortages due to omicron infections and the requisite 10-day isolation period in place leading up to the intensive holiday season were the primary problem, according to the airlines.

"The nationwide spike in omicron cases this week has had a direct impact on our flight crews and the people who run our operation," United Airlines offered in a statement on Christmas Eve. 

JetBlue issued a similar statement: "Like many businesses and organizations, we have seen an increasing number of sick calls from omicron."

Airlines bulked up staffing with new employees prior to the holidays and wooed existing employees to work through the holiday season or take extra hours with increased pay. The strategy worked for some carriers—both Southwest and American Airlines came through with few cancellations—but not all. 

JetBlue CEO Robin Hayes penned a letter to the U.S. Centers for Disease Control and Prevention on Wednesday, Dec. 22 asking for the agency to consider a reduced quarantine period for vaccinated individuals. His letter joined that of Delta CEO Ed Bastion, who sent a similar letter the day prior. Both cited vaccinations, treatment options and more reliable testing that would enable infected employees to return to work more quickly with the reduction of the transmission window. 

The CDC has bowed to this request from airlines and other sectors, but it did not come fast enough to prevent JetBlue from canceling flights further into January. The airline has cut 1,280 flights from Dec. 30 to Jan. 13, citing the omicron-induced staffing shortage affecting its largely Northeast-based crew members, where the variant has surged in the U.S.

Cowen analyst Helane Becker told Fortune that the new CDC guidelines should mitigate the issue, especially if the omicron surge peaks in the first weeks of January and then subsides, as some models and health experts predict it will.  

"We expect [cancellations] to last into next week and then once we are past peak the issues should abate,” Becker told Fortune on Dec. 30.

What About Business Travel?

If past is prelude, the fast-moving omicron variant will disrupt business travel in a number of ways. Companies themselves could place new restrictions on travel. A Global Business Travel Association survey fielded in early December, prior to the height of the U.S. omicron, surge asked travel managers about the willingness of their companies to continue to permit nonessential travel. Just 17 percent said their companies had restrictions in place, but that was a blended number between Europe and the U.S. In Europe, where omicron was already on an strong upward trajectory, 32 percent of respondent companies had restricted travel. Only 12 percent of U.S. respondents had done so, but it was early days for omicron in the States. 

Unlike past surveys, GBTA's most recent did not ask about how the variant would affect employee "willingness" to travel. With new information about increased transmission associated with omicron coupled with the travel uncertainty wrought by airline staff shortages, short-term demand from would-be business travelers is likely to take a hit. 

Indeed, U.S. airfare payment processor and data firm ARC reported corporate airline ticket sales down sequentially nearly 20 percent week over week, for the week ending December 26. Numbers dropped from 52 percent off 2019 sales to 62 percent off the 2019 benchmark. During the holiday week that ended Jan. 2, however, ARC data showed corporate tickets just 19 percent shy of the same week in 2019. Business travel booking demand may need distance from the busy holiday period to shake out.

In the meantime, 37 percent of travel suppliers and intermediaries said their business travel bookings had tracked an omicron-induced slide, according to the GBTA survey.

In-person meetings and events have already taken a major hit from omicron. GBTA itself postponed its December conference in Berlin due to concerns about the variant and fast-changing regulations in Europe around public gatherings.  

Major global conventions and forums are also pulling the plug, for now. The World Economic Forum, scheduled for January in Davos, Switzerland, has been postponed to summer. JPMorgan Chase & Co. has pushed its annual health care conference, also planned for January, to a virtual platform after Moderna and Amgen dropped participation. Amazon, Google, Meta (formerly Facebook), Mercedes, GM, Intel T-Mobile, Twitter and others have either pulled their participation from the Consumer Electronics Show in Las Vegas or gone to a fully virtual presence. The dropouts prompted the event, which starts this week, to slice a day off its schedule.

High-profile moves like these not only eliminate the travel associated with large events, they may have a chilling effect on other events, with decision-makers looking at them for best-practice guidance. That influence could also trickle down to transient business travel—either through company restrictions or the preferences of individual employees weighing risk-reward of each trip.

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This story was updated on Monday, Jan. 3 at 12:53pm with newly issued corporate booking data from ARC for the week ending Jan. 2.

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