The Cost of Travelling Post-pandemic

After what feels like an eternity, travelling is back on the radar and here is everything you need to know about post-COVID-19 travel.

Travel has been on everyone’s to-do list for months. Though the COVID-19 pandemic isn’t over, increased vaccination and awareness among people are helping many countries to open for tourism after months of travel bans.

Domestic tourism is also gradually returning to normal in even densely populated countries such as India. Thus, it can be said that post-COVID-19 travels are gradually rising as more and more people are stepping out of their homes for a much-needed vacation or work.

However, things have changed significantly since the pandemic began. For one, the confidence to travel, though improving, is not too high. US market research firm Destination Analysts, which has been surveying 1,200 Americans weekly to note their travel sentiments, revealed in the 1 November week update that the “near-term outlook for travel is positive.” According to the firm, Americans are inching towards normalcy following the Delta variant surge but are looking at changing their lifestyles to focus more on family, work and themselves. The study found an overall improvement in travel-related matters, including welcoming of tourists and the ability of travel businesses to provide adequate services. The survey also found 53 percent of the respondents have a travel plan for the next three months. However, around 60 percent pointed at high travel prices, with 42.7 percent saying they didn’t travel in the past month because of it. The cost is, therefore, a major factor here.

The question in most of our minds is, will travelling in a post-pandemic world be expensive? Yes. Let’s find out how. A rise in tourism will lead to a rise in costs as businesses get back on their feet. In some cases, it is likely to be even more than what it was in 2019 — the year before COVID-19 was declared a pandemic. The exact figure, however, will vary from country to country. The pandemic was a major blow to tourism and its components. These include travel and accommodation services, which are the two most important expenditures incurred by a traveller. Moreover, costs of COVID-19 tests and travel insurance add to a tourist’s expenses. Meanwhile, the steady rise in oil prices has a significant impact on the cost of travel. Everything, from flight costs to accommodation prices and other related expenses can directly or indirectly affect oil price rise. Therefore, airfares, accommodation costs, oil, insurance and COVID-19 tests are the common parameters to get an estimated cost of domestic or international travel.

Oil and Airfares

Airlines require jet fuel, the demand for which fell during 2020 and much of 2021 as people could not travel and airlines undertook limited operations. However, demand is gradually rising with more and more travelling to various destinations by air. But the problem is that oil prices have risen sharply due to a foreseen supply issue against the rising demand. On 18 October, Brent crude oil futures were at a three-year high of over U$85 (approx. S$115.18) a barrel. The US West Texas Intermediate (WTI) crude futures hit a seven-year high of US$83.73 (approx. S$113.46) before settling at US$83.51 (approx. S$113.16) a barrel. According to a 5 November Reuters report, spot jet fuel in Singapore gained 21 percent in three months and was at US$93.05 (approx. S$126.09) a barrel on 3 November. A rise in oil prices means that airlines will have to pay more for fuel, which would result in flight prices becoming dearer. Meanwhile, the passing of rising costs has already been discussed in the US.

“Higher jet fuel prices lead to higher ticket prices. Ultimately, we’ll pass that through,” CEO of United, Scott Kirby, told CNBC in October. Quoting S&P Global Platts data, CNBC reported that the price of jet fuel in the US was up more than 115 percent from 2020 to USD 2.3282 a gallon. Prices are also affected by occupancy and policy decisions. During the pandemic, airlines operated with several restrictions such as keeping the middle row unoccupied and maintaining social distance. However, with improving conditions, several governments have since allowed airlines to increase occupancy. Prices will also depend on the season as tickets during holiday seasons tend to be costlier than on other days. It is, therefore, best to explore flight prices before travelling for a proper estimate. However, airlines are not the only mode of domestic travel in some countries. Compared to airlines, train travel might be a cheaper option and is, thus, the preferred mode of travel by millions every year.

Accommodation Prices

Prices of hotels usually rise phenomenally during holiday seasons and other key annual events. A recent example was seen in Scotland’s Glasgow, where attendees of the 26th UN Conference of Parties on Climate Change (COP26) had a harrowing time getting hotel rooms. The high demand led to an astonishing price rise with some charging £1,400 (approx. S$2,540) for a room that is normally priced at £42 (approx. S$76) only. City A.M. reported in October that data shared by travel agent Buttler indicates that global hotel prices are now 184 percent more than it was in 2020, with more and more people thronging to their favourite holiday destinations. According to the data, most major cities witnessed a rise in the prices of hotel rooms because of exceptionally high demand. New York City, US, recorded the highest price rise of 28 percent (to approx. US$300) against a rise in demand by 361 percent. Madrid and London also recorded a percentage rise in prices by 24 percent and 23 percent against a demand surge of 409 percent and 220 percent, respectively. In countries such as Singapore, where despite a rise in demand by 90 percent, the price of hotel rooms has gone up by just one percent. “America, the UK, Spain, and Portugal have all told the world they’re open for business while Australia, South Africa, and Singapore have either taken a more cautious approach to reopening or have reinstated certain travel bans having previously relinquished them,” City A.M. quoted Timothy Davis, co-founder and CEO of Butter, as saying.

Insurance and COVID-19 Tests

Not all travel insurance companies include COVID-19 in their cover, but many offer both medical as well as cancellation coverage against the disease. This is important in cases of flight and accommodation cancellations because of a sudden rise in cases, or if a traveller has contracted the virus in a foreign country and needs to meet hefty medical expenses. As with insurance, an additional cover means the insured will have to shell out more. Prices vary by country and insurance company. Some countries, including Singapore and Thailand, have made it mandatory for foreign travellers to be covered under travel insurance that comprises COVID-19 treatment. Although this implies that people travelling to these countries have no choice but to get insured, it also results in additional expenditure, albeit a necessary one. Singapore, for instance, warrants that short-term visitors have a COVID-19 inclusive medical insurance cover of a minimum of S$30,000. In Thailand, the minimum coverage has to be US$50,000. However, more and more people are opting for high-priced travel insurance that includes a COVID-19 cover, as was found by American insurance company Seven Corners in 2020.

According to Reuters, 80 percent of the total medical travel plan sales by Seven Corners was of a new plan that provided a COVID-19 cover. It is, therefore, best to check travel insurance providers in one's own country and compare what they are offering for a better understanding of the costs and coverage. Depending on where one is travelling to, COVID-19 tests might be required both before departing for and upon arrival at the destination. Test prices vary wildly between countries, so these have to be factored in at the time of making travel plans. According to a research by UK-based airline and airport reviewer, Skytrax, as of 15 April, 2021, an airport PCR test was the cheapest at the Mumbai airport at US$8, while it was the costliest at Japan’s Kansai international airport at US$404. Similar was the case with the rapid antigen test; the price in Mumbai was again the cheapest at US$2, while it was the highest in Helsinki at US$214.