This post was originally published on this site
The emergence of the omicron variant of the virus that causes COVID-19 may have prompted the reintroduction of travel restrictions, but that hasn’t stopped jetsetters from planning more getaways.
After reports of the new variant emerged in November, many countries sought to partially or fully restrict international travel — against the recommendations of the World Health Organization. More recently, the U.S. tightened testing requirements for international travelers, requiring all who enter the U.S. from abroad to provide proof of a negative COVID-19 test taken within a day of their departure.
These restrictions reflect the concerns of world leaders about the speed with which omicron has spread, as early reports have indicated it might be more transmissible than other variants. Nevertheless, there is a lot public-health experts still don’t know about the omicron variant, including whether it causes more severe cases of COVID-19 or if it is resistant to the vaccines on the market.
Previous variants, including the delta strain, contributed to a downturn in travel demand. But so far, people are still planning to move forward with scheduled trips — and even plan new ones.
What does the news mean for your wallet? Sign up for Personal Finance Daily to find out.
Travel subscription service Scott’s Cheap Flights surveyed more than 600 members on whether the omicron variant had altered their travel plans. The vast majority — 87% of respondents — said they weren’t changing their plans for Christmas travel, while 10% said they cancelled their trips and 3% changed the location of their destination. That said, 79% of the survey’s respondents indicated they had concerns about omicron disrupting travel plans for 2022.
“One survey found that 87% of travelers are still planning to follow through with Christmas trips, despite the emergence of the omicron variant.”
Ultimately, the effects on travel demand have depended on the destination. “When the new variant was announced, overseas travel demand began tanking virtually overnight, and has actually rebounded a bit in the few days since the shorter testing period was announced,” said Scott Keyes, founder of Scott’s Cheap Flights.
Data from the travel booking site Hopper showed that since Nov. 26, when WHO classified omicron as a variant of concern, the weekly average for search demand for domestic travel has climbed 10%. Comparatively, international search demand hasn’t changed. Prior to Nov. 26, travel searches had decreased for both domestic and international trips, which Hopper economist Adit Damodaran attributed to the end of the shopping period for Thanksgiving travel.
“We are seeing a shift in share of search volume towards more domestic travel,” Damodaran said. Currently, around 62% of flight searches on Hopper are for domestic itineraries, up from 57% before the omicron variant was detected.
Airfare prices haven’t changed dramatically yet
This shift in demand hasn’t caused a significant reduction in the cost of airfare yet, though. Hopper data showed that domestic airfares have increased, reaching 2019 pricing levels that are in line with the high prices seen this past summer. International airfares, meanwhile, have only slightly decreased, falling 2% for flights out of the U.S. and 5% for flights into the country.
“Airfare is one of the most volatile purchases we make, so ascribing changes in fares to any one variable is always fraught,” Keyes warned, but he added that “airlines haven’t made any material changes to their capacity, while demand has shrunk.” As a result, he suggested that cheaper fares could emerge if omicron concerns are persistent.
And if the variant remains an issue in 2022, Keyes projected that airlines would slash pricing for international flights, and possibly reroute some of their largest planes to serve domestic routes in the U.S.
“Those 787s will make fewer trips to London and Madrid, and make more trips to Los Angeles and Miami,” he said.
How to approach travel insurance in the wake of omicron
Thus far, there haven’t been many changes to airlines’ COVID-related policies, even though omicron has somewhat hampered the ability to travel. The main change that airlines are making is to waive change fees in cases where countries are not accepting foreign visitors.
Nevertheless, the latest variant of the virus that causes COVID-19 is a reminder of how volatile the pandemic is. “With varying policies and changing travel restrictions, we recommend that travelers book future trips with flexibility to ensure you can make changes to your plans if and when you need to,” Damodaran said. This could mean booking with an airline that has more lenient flight-change policies, or utilizing services that will rebook you if you request it.
As for travel insurance, purchasing a policy right now is not always straightforward.
“Many people buy travel insurance assuming it will allow them to simply cancel the trip for a full refund if they later reconsider,” Keyes said. “But that assumption makes a fool of you and me because most insurances expressly do not cover ‘COVID fear’ cancellations.”
If a traveler wishes to purchase a policy that will allow them to fully cancel a trip because of COVID-related concerns, they will need a “cancel for any reason” policy. These policies are more expensive, and don’t always provide a full refund.
That said, Keyes underscored that jetsetters may already be well protected by their credit-card company.
“Many cards automatically include travel protections, as long as you used that card to pay for your ticket,” Keyes said. “These protections include compensation for flight delays, baggage mishaps, even reimbursement for accommodation and food for many canceled flights.”
