GREG BEARUP The Weekend Australian Magazine
June 18, 2021
11 MINUTE READ

Cyclists tackle Derby’s mountain bike trails. 

When the eggheads at the ­Australian Bureau of Statistics hunch over their Casios and crunch the Census figures this year they’ll surely reckon there’s been some sort of data blunder as they tap in the stats for the tiny town of Derby, in the mountains of northeast Tasmania. Last time they looked, six years ago, Derby was a two-pub-one-banjo town of 173 people where you’d be lucky to stumble across a decent pie. Nothing much had happened there since the tin mine closed in 1948. With an unemployment rate north of 20 per cent, when the national figure was south of seven, it was a dirt-poor town in Australia’s least affluent state. The median weekly household income was just $556 – $882 below the national average. With a median age of 58, its residents were, on average, two decades older than the rest of the country.
Tim Watson, general manager of the local ­Dorset ­Council, says Derby had “two feet in the grave”. Things were bleak; when its last remaining store closed, the council began subsidising staples and selling them at the town’s mining museum as many of the residents couldn’t afford to travel to the next town for milk and bread and other daily essentials. And then came the resurrection – a ­godsend for the whole of northeast Tasmania.
In 2015, just before the last Census, the first in a series of high-quality mountain bike trails was quietly opened by the council in the stunning rainforested hills above Derby. Word spread that they’d created something special and cyclists began arriving from the mainland. Things started to snowball. More trails were built. In 2017 Derby hosted a leg of the Enduro World Series, a premier mountain bike event in which the world’s 50 best ­riders were competing. These elite riders voted Derby the best trail in the world. Cyclists started flying in from around the globe.

Derby, Tasmania

I first visited in 2017, early in this metamorphosis, and it was as though the place was awakening from a long slumber. Four years later it has ­blossomed and it now has the zing and the vigour of a bustling alpine ski village. It’s a frontier town and the air is fresh with the sweet scent of opportunity. Down on Lake Derby, on the edge of town, Australia’s first floating sauna was recently opened and weary cyclists and hikers now pay $45 an hour to relax in the steaming-hot cabins before plunging into the icy waters of the lake. It’s been a raging success. Derby is now the sort of place where young folk happily spend their gap year, working as guides or bike mechanics.
Watson says the council recently did a rough survey, counting all the jobs that had been created just in Derby’s town centre. They came up with 120. Hundreds more people have been employed throughout the district. Every available house in and around Derby has been tarted up and turned into a holiday rental. It’s gone from basket case to boom town and now there’s plenty of work for anyone who wants it. The council has never had to do a detailed survey to measure the trails’ economic impact because, says Watson, “it’s so bloody ­obvious, we’ve never had to justify it to anyone”.

In Derby

​The local property boom leaves even Sydney in its dust. Andrew Bennett, an agent in the nearby service town of Scottsdale, says prior to the trails opening he had a house in Derby on his books that was impossible to sell. It had been on the market for three years for the bargain price of $125,000. As soon as the trails opened he had three people elbowing each other to buy it. “The owners were just happy to sell… it’d be worth somewhere between $400,000 and $500,000 now,” he says. All across Derby, ramshackle miners’ cottages have been transformed into upscale accommodation. A makeshift caravan park has popped up by the river and the town now has more than 300 accommodation beds. At the last Census it had only 10, and they were rarely slept in.
Tens of thousands of mountain bikers now travel to Tasmania each year to cycle the trails, spending many tens of millions of dollars, and the effects are being felt right across the northeast of the state, particularly in Launceston, which is the main entry point for those flying in. Chris McNally is a co-owner of the boutique hotel Stillwater Seven and its adjoining restaurant Stillwater, which sit at the mouth of Cataract Gorge on the Tamar River at Launceston. McNally says each week a couple of groups of mountain bikers stay in the seven-suite hotel. “The cycling has really ­showcased the entire area,” he says. “It’s incredible what they have done up there.” The constant stream of tourists flying in to go cycling has been a boon for Stillwater and its sister restaurant, Black Cow Bistro, which had two sittings fully booked on the midweek nights we visited.
Late in 2019 another 110km of tracks, costing about $4 million, were opened in the neighbouring Break O’Day Council, linking the mountain trails of Derby to the coast around St Helens. One of those newly opened tracks, Bay of Fires, runs 42km from the mountains through some of ­Tasmania’s most spectacular rainforest and ends on the beaches and those famous orange-glowing granite rocks. It is surely a front runner for The World’s Most Magnificent Mountain Bike Trail.

The Derby trails. 

Mountain biking has overtaken golf in popularity in Tasmania, according to Chris Griffin, CEO of Visit Northern Tasmania. “It is almost as strong as multi-day walking in terms of things people do when they come to Tassie,” he says. “It’s been an amazing success story… both Derby and St Helens have just had record visitations.”
Griffin says one of the unexpected consequences of the trails has been a cycling renaissance among locals. ­Tasmania is now producing some of the world’s best young mountain bikers and there’s been an explosion of people ­taking up the sport. “The most common sight in Launceston now is cars with racks full of bikes,” he says. “The uptake of mountain biking by local kids has meant many parents have been back in the saddle for the first time since their school days, riding with their kids.”
In 2019 – the last consistent statistical year before Covid – 69,314 people travelled from the mainland to go mountain biking in Derby, Griffin says. They spent on average $250 a day and stayed in Tasmania an average of seven days. Those cyclists spent more than $120 million in the state. Since then, the tracks at St Helens have opened and the numbers have grown.
The Museum of Old and New Art completely changed the fortunes of Hobart and the image of Tasmania when it opened in 2011. The trails of Derby and St Helens are Tassie’s other MONA.
Launceston woman Tara Howell and her husband Steve quit their jobs when they were 23 and 25 respectively to pursue their crazy-brave dream of starting a luxury mountain bike venture in Tasmania. Tara was working in a corporate marketing job, having paid her way through ­university by working as a guide for luxury adventure tourism companies, taking hikers on the Overland Track and Bay of Fires walk. Steve was a mechanic who’d grown up with a love for the ­Tasmanian bush and was a keen mountain biker. Early in their relationship they promised each other they’d lead an adventurous life together.
A couple of years before the opening of the Derby trails they met with Dorset Council’s GM, Tim Watson, who outlined his grand plans for mountain biking to revive the fortunes of the ­district. They were impressed with Watson’s drive and vision. “Having been a walking guide, I had what I thought was a good understanding of the market for luxury adventure tourism,” says Tara. “There was no one doing luxury adventure mountain biking. We believed that the same people doing the luxury walking tours would also be into mountain biking. We thought it would be big… all around the world the popularity of mountain ­biking was just exploding.” They rolled the dice and bet everything they had on a hunch. Everyone told them they were crazy, or damned them with fake enthusiasm. They pressed on. They put in a detailed proposal and were awarded a $500,000 federal government business development grant; unable to lure investors, they then managed to convince a bank to lend them $1 million. In 2017, after four years of hard slog – including getting the necessary approvals to build accommodation in the middle of a forest in a regional reserve – they opened Blue Derby Pods Ride, ­luxury accommodation for a maximum of eight cyclists, hidden away in the trees above Derby.
“We were completely naive,” Tara says now of their youthful exuberance. She’s just turned 31 and has a 16-month-old son, Winton. “I probably wouldn’t do it now. You really need to do it when you are young and you haven’t got debt, you ­haven’t got kids, you haven’t got any baggage – you just do it. You’ve got nothing to lose.”
In the how-to book for successful rural and regional development, the golden rule must be to make your town an attractive place for young ­people like Steve and Tara Howell to live. They are the fire in the belly of regional revival. Tara says that had it not been for the Derby trails she and Steve would probably have left Tasmania to look for opportunities on the mainland or abroad. Instead they stayed and built a successful business that now employs 20 full-time and ­part-time cooks, guides and cleaners – the equivalent of eight to 10 full-time staff. A huge ­consumer of ­gourmet Tasmanian ­produce, it is a business built on giving its guests the best of everything Tasmania has to offer – beers, ­pastries, wine, cheese, rainforests, guides, pickles, beaches, mountain bike trails, oysters, bikes, views… “Basically, at every touchpoint we are ­trying to blow people’s minds,” says Steve.
One morning we rise early and, towing a trailer full of bikes, we are driven to the summit of Blue Tier, a range of hills halfway between Derby and St Helens that rises to a summit of 859m. It’s a beautiful sunny day with a nip in the air and we set off for the first kilometre or so along a rocky ridge line with our destination, the coast, far on the horizon. The trail is tricky and rocky but immaculately maintained. We drop off the mountain into a forest of ferns that feels ­prehistoric. The track is what mountain bikers refer to as “flowy” – like a smooth rollercoaster. In parts it’s also ­challenging – at one point I lose control and end up over the handlebars in the dirt, as does almost everyone in our group at some point.
We enter a stand of Eucalyptus regnans, the world’s tallest flowering plant, and stop to admire these whales of the forest. The riding is mainly downhill but there is still a fair amount of up and I’m glad to be riding a new, state-of-the-art ­electric mountain bike – it’s like I’ve swallowed a schooner of Lance Armstrong Lager before setting off. We pop out of the rainforests and into the coastal ­hinterland of granite, sandy soils and open ­eucalypt forests – an incredible cross section of the Tasmanian landscape. Even with electrical assistance 42km is a long mountain bike ride so it’s a welcome relief when we smell the ocean, cruise down to a secluded beach on the Bay of Fires and plunge into the crisp, clear water.
After we towel off, a picnic meal prepared by chef Tom Dicker is laid out on those famous firey granite rocks – local oysters, freshly caught ­octopus cooked with chorizo and spuds, scallops in lemon and dill butter, all washed down with local Pirie sparkling wine and pale ale from Little Rivers Brewing Co. If I was to tally up the best days of my life, this one would make the finals.

Accommodation in Derby. 

When Steve and Tara were setting up their business they thought it would appeal to people in their 30s and 40s riding “analogue bikes” – without electric motors. Surprisingly, the average age has been 53 and about half the clients are on ­electric bikes. Husbands ride with their wives, ­mothers cycle with their sons. “There’s so much desire for people to challenge themselves, ­especially when they are in their 40s and 50s,” Steve says. “They want to be free and jump on the bike and roar down a mountain like they used to when they were a kid.”
It is also a deeply personal experience. There’s something about being out in nature, at the edge of your comfort zone, that triggers intense emotions. Our 19-year-old guide Charlie Edis, who is spending part of his gap year at Derby, says he’s had ­middle-aged businessmen sobbing on his shoulder, dissatisfied with the direction of their lives.
It’s been a game-changer for St Helens, too. Brendan Watmore, from tourism analytics company Tourist Tracka, says an analysis of mobile phone data shows there was a 50 per cent increase in the number of Victorians ­visiting St Helens in the year to January. “Not only are more Victorians travelling, but we saw an increase of 200 per cent from higher socio-economic groups,” he says. “These higher-value travellers are the most attractive to destination marketers because they spend more money on their experiences and tend to stay for longer and see more places.”
Jayne Richardson, from Break O’Day Council, says businesses in the St Helens area report takings are up 50 per cent compared with previous years. She says it’s usual for staff to be laid off during ­winter but “the businesses we surveyed last winter had put on staff – it was incredible”. And when it was announced the new trails would be built, $15 million worth of new investment in tourism ventures were lodged with the council – new cabins at the caravan parks, motels being renovated, two new bike shops, pubs dolled up…
Richardson says there’s been an influx of young people into the shire and a quarter of new residents nominated the opening of the mountain bike trails as one of the major factors influencing their decision to move. St Helens, it seems, is about to do a Derby.

Stephen Calleja The Malta Independent Sunday, 13 June 2021,
Malta’s tourism industry has been the mainstay of the economy for decades.
Starting off with the first hotels in the 1960s, the sector developed quickly over the years as successive governments understood that it was generating jobs and bringing in so much money.
By 1970, the arrivals were at around 170,000, a big number at the time, given the infrastructure Malta had 50 years ago, but less than what we get in one month these days – pre-Covid19 days, that is.
We had reached 700,000 by 1980, but the political tribulations of that particular decade pushed the numbers down again to around 500,000 before starting to climb again post 1987 as the country started to invest heavily in upgrading its services including, but not only, communications.
We reached the one million target in the early 1990s, based mostly on a strategy to market Malta as an island of sea and sun. The private sector heavily invested in new hotels and the upgrading of existing ones, going for the high-end tourist as well as opening up more to business and conference travel.
As Malta diversified its product, went for more niche markets and worked to expand the English language schools sector, more and more tourists chose this little island of ours to spend a few days of holiday, come over for corporate purposes and study.
Since then, the industry grew exponentially until it doubled itself to two million arrivals in the mid-2010s and edged closer to three million. Year after year, the number of arrivals grew, although this did not always translate into higher expenditure. Still, the industry remained one of the major pillars of the Maltese economy.
Then Covid-19 hit, and what was painstakingly built over many years crumbled into almost nothing. The spread of the disease quickly meant that the airport needed to be closed for a time and, even when it reopened, most people were still too afraid to travel. As a result of this, the tourism industry as a whole suffered tremendously. Tourists stopped coming to Malta. There followed months of empty hotels and jobs in the industry being lost.
With Covid-19 numbers going down since April, the government could plan what it described as the road to economic recovery. It set 1 June as the day when it would become pro-active again in the tourism industry, while at the same time offering incentives to potential tourists, such as the free independent traveler scheme. Tourists were told that they will be “paid” to come to Malta, as they would be given up to €200 each in free services.
1 June has come and gone, and it is still too early to gauge the results. But the months-long “suspension” of the tourism industry should have been a chance for a rethinking of the tourism industry.
Saturation point
It will take some time, possibly a few years, for Malta to return to having the same tourist numbers that it did in 2019. Statistics available on the Malta Tourism Authority website show that, in 2019, the number of tourists who visited Malta was nearly 2.8 million, including overnight cruise passengers. The number of guest nights moved up to more than 19 million, for a seven-day average length of stay. That year, tourists spent €2.2 billion.
Looking more closely, per capita expenditure dipped slightly from €687 in 2018 to €683 in 2019 but, given that, on average, fewer nights per spent, this still meant an increase in per capita expenditure per night from €113 in 2018 to €115 in 2019.
Big numbers which were set to grow even more were it not for the pandemic.
But the question that should be asked is this: how many tourists can Malta sustain? The older generations will remember that there was talk of a saturation point even when the one million target had been achieved. As the numbers continued to grow and we moved beyond double and were getting close to triple, the debate continues.
Before Covid, the government constantly boasted about the regular increase in arrivals. But is there a limit as to how many tourists Malta can accommodate? Is there a saturation point? Have we reached it and, if not, are we getting close to it?
Many will argue that although the numbers are very high in the summer months – some would say “too high” – there are months in which Malta could sustain an even bigger influx. The mild winter Malta experiences, together with the various cultural events that are being held during this time, could be an attraction to the many tourists who would prefer not to come over in our stifling summer months. We still have pockets we could fill in these particular months.
So far we have not been able to level the numbers across the year. We have many more tourists arriving in summer when compared to winter, which means a bigger stress on the industry and infrastructure in the warmer months, and less pressure in the cooler weather.
Five-star
We would like to think that Malta is a five-star destination. But if you just look around you will quickly realize that we are far from reaching that level.
Our hotels, perhaps, can offer such a service to their customers within the confines of their complex. But most tourists do not come to Malta to stay in hotels. They come here to visit parts of the country, and so they come across situations which do not give them the idea that they are in a top-notch destination. Once they leave the comfort of the hotel they are staying in, they come face to face with situations that are not pleasant at all.
Cleanliness, for a start, is not our strong point. Most of us still tend to think that what is public is not ours. We keep our homes spick and span, but we do not care to do likewise when we are on the road and in other public places, be they beaches or gardens. There is litter everywhere.
That the government then boasts that hundreds of tonnes of waste were removed in a clean-up campaign confirms all this – we are a dirty nation and a dirty people. The question is: how long will it take for a need for another clean-up campaign, when more hundreds of tonnes of waste will be collected?
Services offered to tourists also leave much to be desired. Improvement has been registered in public transport, but we still lag behind in terms of bus punctuality. This, in part, happens because most Maltese still prefer using their own vehicles to go from point A to point B, which means that in spite of all the investment in the road network, there are still too many areas where traffic slows down. Talk of other public transport alternatives remains just that – talk.
The country still remains one whole permanent construction site. Go anywhere, and you will find cranes which disturb the view or block roads. Go anywhere and you will find some building being pulled down. Go anywhere and just listen to the noise of cars and machinery. Go anywhere and you can taste the dust and pollution.
This is having an impact on the lives of the residents, but also leaves tourists disenchanted. They were promised a quiet holiday, but they are not getting one.
Overcrowding
Malta’s geographical size is not getting any bigger, but the population has mushroomed. It took us 50 years to climb from the roughly 300,000 people in 1960 to the roughly 400,000 people in 2010, but then it took us just 10 years to move up by another 100,000 to 500,000 and more in 2020. Add give or take an average of 200,000 tourists who are in Malta every month (in normal times) and one can understand the stress – from an already high population density of 1,600 persons per square kilometer, this moves up to more than 2,200 persons per square kilometer when one calculates tourists.
The Labour government’s policy of upping the economy through population growth had its positive effects but it had its downsides too.
It meant more apartments, more cars and more pressure on the infrastructure and the environment. The new roads that were built are already not enough to meet with the demand. And the building goes on, relentlessly, often taking up the few open spaces that we have left.
Gozo was once a quaint little place where one could get some respite and much-needed breathing space. It is no longer so (except for the time when pandemic restrictions were in place). And there are now plans to link it by tunnel to Malta. If and when it happens, it will become less isolated and more accessible, but also more crowded and unattractive.
For many years, tourists used to come to Malta because of the quiet, laid-back atmosphere and the weather. But summers are becoming hotter and, sadly, Malta is no longer as picturesque and charming as it used to be.
Experts will tell you that it would be better to attract fewer tourists, but bigger spenders. This would ease the pressure while at the same time maintain or possibly increase profits. But we are far from being able a top-notch destination, so there has to be a reliance on numbers. The more we get, the more Malta becomes less attractive. And the more Malta becomes less attractive, the more it is shunned by the bigger spenders.

UNWTO Tourism Barometer Volume 19 Issue 3 May 2021

Miami Herald June 04th, 2021
All eyes will be on the Caribbean this weekend as passengers board a cruise ship in the region for the first time in seven months.
However, the highly anticipated return of cruising in a region hard-hit by the coronavirus and now seeing a surge in cases amid low vaccination rates and the reopening of tourism-dependent economies, is worrying, say some industry watchers and public health experts, who fear that cruises in the middle of the ongoing global pandemic may do more harm than good.
“It is imperative to act with utmost caution,” said Dr. Sylvain Aldighieri, incident manager for the World Health Organization’s Americas arm, the Pan American Health Organization.
Cruise companies have put new protocols in place to better protect passengers and crew. Still, Aldighieri and his colleagues at PAHO say there are no guarantees that ships, which spread COVID-19 around the region last year, won’t see a repeat of the outbreaks that forced Caribbean nations to shut their ports in March 2020 for fear sick passengers would overwhelm their finite health resources.
“At present, with the evolution of the spread of the virus across the Americas and Europe, the unknowns related to the impact of COVID-19 vaccines on the transmission of the virus, and the challenges related to accessing the vaccine and rollout of the vaccine in most of the countries of the region, we need to act with caution,” he said.
Unlike the U.S., which has largely reopened its economy amid rising vaccination rates and declining infection rates, Caribbean nations are weighing the economic benefits of welcoming cruise passengers with the potential public health calamity an outbreak could bring. Many Caribbean islands, including St. Maarten, where this weekend’s cruise will depart from, are still reporting a surge in infections.
AT LEAST FIVE CRUISE SHIPS TO DEPART FROM THE CARIBBEAN
On June 5, Celebrity Millennium, which is part of the Royal Caribbean Group’s Celebrity Cruises fleet, is scheduled to depart from the Dutch territory for a seven-night cruise that will take U.S. passengers to three other islands in the eastern Caribbean: Aruba, Curacao and Barbados. The cruise line will offer other itineraries that include stops in St. Lucia and Tortola in the British Virgin Islands.
Ludmila de Weever, St. Maarten’s tourism minister, recently told journalists that having the ship home port out of the Dutch territory “is a significant economic milestone for St. Maarten and another step on our path to economic recovery.”
“Celebrity Cruises home porting here will help drive our economy and rejuvenate opportunities for our people,” she said. “The opportunities are endless. It is hotel nights, it is transportation, whether big tour companies or taxi drivers, bus drivers, restaurants.”
Over a 14-week period, the cruise company is expected to garner the country as much as $52 million, the ministry said.
At least four other cruise ships have plans to start cruises from the Caribbean this summer: Royal Caribbean Group’s Adventure of the Seas, Carnival Corporation’s Seabourn Odyssey, Windstar’s Star Breeze and Crystal Cruises’ Crystal Serenity.
Three other ships — Royal Caribbean Group’s Vision of the Seas and Norwegian Cruise Line Holdings’ Norwegian Gem and Norwegian Joy — recently canceled plans for cruises home ported in the Caribbean after the Centers for Disease Control and Prevention signaled it would soon allow for revenue cruises to begin out of U.S. ports.
So far the CDC has given the green light to two cruise ships to restart revenue cruises out of the U.S.: Celebrity Edge will depart Port Everglades on June 26 and Celebrity Equinox will depart July 4 for a seven-night cruise visiting Cozumel and Costa Maya, Mexico, and Nassau, The Bahamas. Several other ships are pending similar approvals for Caribbean cruises.
TRAVEL PROTOCOLS, VACCINATIONS CARDS
Caribbean countries, some still struggling with testing capacity and vaccine hesitancy, are taking different approaches to vaccine requirements. The CDC recommends that all cruise ship passengers, crew and port workers be vaccinated, but will not require it. Meanwhile, PAHO and the WHO say they do not support requirements asking travelers to show proof of vaccination to travel. Still in recent weeks, a number of Caribbean countries have changed their protocols to do just that.
St. Kitts and Nevis will require all crew and all passengers over the age of 18 on ships that visit its shores to be vaccinated. Anyone under the age of 18 must present a negative RT-PCR test within 72 hours of embarkation. All personnel interacting with cruise vessel operations including ship agents, port staff, taxi and tour operators must be vaccinated.
The Bahamas has also announced changes to its testing requirement for vaccinated travelers. Those who are fully vaccinated will be required to upload proof of vaccination in lieu of an RT-PCT test requirement and have proof they have passed the two-week immunity period.
St. Lucia recently announced an easing of its on-island protocols for fully COVID-19 vaccinated travelers who present a vaccine card showing they are two weeks passed their dosage requirement. They will now be allowed to book rental cars, dine at more local restaurants and visit tourism spots like Castries, Rodney Bay and Soufrière like a local. All travelers 5 years and older into St. Lucia still must have a negative RT-PCR COVID-19 test taken no more than five days before arrival.
St. Lucia’s Prime Minister Allen Chastanet, who has been leading discussions on the return of cruising to the Caribbean, specifically the eastern Caribbean, said ideally all passengers and crews would be vaccinated. Absent that, he said, they have taken steps to safely welcome the return of cruising tourists.
Chastanet said the itinerary through the eastern Caribbean is being treated as one stop with one chief medical officer in charge in case of a public health emergency. He and his counterparts in other Caribbean countries, he said, have “encouraged” cruise lines to have everyone vaccinated.
Dr. Michael Callahan, director of the Clinical Translation, Vaccine and Immunotherapy Center at Massachusetts General Hospital, who helped treat and evacuate sick passengers and crew on the Diamond Princess and Grand Princess cruise ships last year, said companies operating cruises in the Caribbean should require everyone on board who are 12 years old and older to be vaccinated.
“The pandemic is not over until its also over for Caribbean nations that provide cruise ships with a port of call,” Callahan said via email. “Until then, the Industry should only visit ports in countries with strong vaccine programs and public health. To do otherwise poses a risk of spreading more variants, which will increase the risk for everyone. Nobody who understands the pandemic thinks it’s a good idea for cruise ships to go back to sea this summer with unvaccinated passengers and crew. The industry poses a unique risk to global health by providing a safe haven for COVID among unvaccinated passengers, and transporting these more dangerous viruses from country to county.”
The region has long pushed to have summer cruises through its crystal blue waters. Still, some are accusing regional leaders of prioritizing tourism over public health.
“We’re trying to do everything we can to minimize the level of risk,” Chastanet said. “There’s risk in everything that you’re going to do. I think our solution is a very good example that we’ve taken that risk head on and not allowed COVID to define us.”
COVID-19 ‘DRIED UP’ CARIBBEAN TOURISM RECEIPTS
In a paper published in July 2020, the Inter-American Development Bank said that Latin America and the Caribbean will suffer an unprecedented economic shock from the sharp downturn in tourism. The Americas region is home to the world’s most tourism-dependent economies, with Aruba, where one in three jobs is linked to tourism, topping the chart, followed by Antigua and Barbuda, and The Bahamas. In fact, 14 of the 15 most tourism-dependent nations in the region are located in the Caribbean, the IDB said.
Tourism receipts in the eastern Caribbean, which account for 40 percent of Gross Domestic Product, have “dried up,” the International Monetary Fund has said. The cruising bans and drop in air travel caused tourism-dependent countries to contract by 9.8 percent in 2020. Though countries like St. Lucia and others in the eastern Caribbean initially managed to contain the virus, the reopening to international travelers has brought new waves of infections, forcing lockdowns and curfews.
Barbados Tourism Minister Lisa Cummins, speaking at a recent Martinique tourism conference about the future of cruise tourism in the region said, while regional authorities and public health officials continue to have “serious conversations” around harmonizing protocols for the resumption of cruise tourism, she is “concerned” that discussions about COVID, protocols and vaccines, will only take officials to the point where they have successfully navigated the resumption but not the future of the cruise industry in the Caribbean.
“What does a new model look like?” Cummins said. “As we develop new protocols, we have to talk about vaccine equity, the challenges that are being faced by many of our economies in accessing vaccines so that we can restart the travel industry; so that we can restart the cruise industry.”
The industry, she said, brings close to 3.9 million passengers through the Caribbean region.
THE CARIBBEAN’S COVID-19 VACCINE INEQUITY
Vaccination efforts in the Caribbean region continue to be hampered by vaccine hesitancy and low access to doses, with many countries relying on the U.N.-backed COVAX Facility to get doses that are in short supply.
While the U.S. has a vaccination rate of 51 percent, an analysis of figures for COVID cases, deaths and vaccinations by the Miami Herald, el Nuevo Herald and McClatchy’s Washington Bureau found that many Caribbean countries continue to lag behind. The two island nations, Barbados and the Bahamas, and one territory, St. Maarten, where ships will be home ported, all have less than 50% of their population vaccinated. The island-nation with the highest vaccination rate, according to the analysis, is the Cayman Islands at 65.5%. Despite that, it has chosen to keep a cruise ban in place for the time being.
The lack of a consistent vaccination requirement for cruise lines, and the lack of clarity on how an outbreak may be dealt with, creates unease for some.
“The question is going to become for those Caribbean communities, what reopening plans do they have in place?” said André Wright, executive vice president of Standard International Group, which follows the cruise industry and advises port authorities. “Will they just accept those passages that are vaccinated and then how is that all going to be enforced once they’re on the ground? These are questions that I am not hearing all of the answers from each and every Island.”
Cruise companies have different vaccination requirements. Windstar and Crystal Cruises will require only passengers to be vaccinated, Royal Caribbean and Celebrity Cruises will require all crew and passengers over the age of 16 be vaccinated and Seabourn will require all on board to have had the shot.
Testing requirements vary as well, with some companies requiring negative antigen tests at the pier and others negative PCR tests within a certain time frame prior to boarding.
Tests alone were not enough to stop a ship-board COVID-19 outbreak during the last cruise in the Caribbean. Seven passengers and two crew members tested positive for COVID-10 aboard the SeaDream 1 cruise ship in November. What was supposed to be a seven-day voyage launching cruising’s comeback in the region was cut short after passengers began to test positive for COVID-19 midway through the cruise. The ship promptly returned to Barbados, where patients were sent to local hospitals.
With at least seven ships planning cruises in the region at the same time this summer, Wright worries about the well-being of locals who have not yet been vaccinated.
“The health and safety protocol has to be sounded out, it has to make sense for not only the protection of the cruise passengers, and the money that they’re going to spend on the islands, but also for the communities themselves,” he said. “And I don’t think much attention has been put to that.”

​UNWTO June 2nd 2021
International tourist arrivals were down 83% in the first quarter of 2021 as widespread travel restrictions remained in place. However, the UNWTO Confidence Index shows signs of a slow uptick in confidence.
Between January and March 2021 destinations around the world welcomed 180 million fewer international arrivals compared to the first quarter of last year. Asia and the Pacific continued to suffer the lowest levels of activity with a 94% drop in international arrivals over the three-month period. Europe recorded the second largest decline with -83%, followed by Africa (-81%), the Middle East (-78%) and the Americas (-71%). This all follows on from the 73% fall in worldwide international tourist arrivals recorded in 2020, making it the worst year on record for the sector. 

​Lack of coordination harms #RestartTourism
UNWTO Secretary-General Zurab Pololikashvili comments: “There is significant pent-up demand and we see confidence slowly returning. Vaccinations will be key for recovery, but we must improve coordination and communication while making testing easier and more affordable if we want to see a rebound for the summer season in the northern hemisphere.”
The latest survey of the UNWTO Panel of Tourism Experts shows prospects for the May-August period improving slightly. Alongside this, the pace of the vaccination rollout in some key source markets as well as policies to restart tourism safely, most notably the EU Digital Green Certificate, have boosted hopes for a rebound in some of these markets.
Overall, 60% expect a rebound in international tourism only in 2022, up from 50% in the January 2021 survey. The remaining 40% see a potential rebound in 2021, though this is down slightly from the percentage in January. Nearly half of the experts do not see a return to 2019 international tourism levels before 2024 or later, while the percentage of respondents indicating a return to pre-pandemic levels in 2023 has somewhat decreased (37%), when compared to the January survey.

​Tourism experts point to the continued imposition of travel restrictions and the lack of coordination in travel and health protocols as the main obstacle to the sector’s rebound.
The Impact of COVID on Tourism cuts global exports by 4%
The UNWTO World Tourism Barometer also shows the economic toll of the pandemic. International tourism receipts in 2020 declined by 64% in real terms (local currencies, constant prices), equivalent to a drop of over US$ 900 billion, cutting the overall worldwide exports value by over 4% in 2020. The total loss in export revenues from international tourism (including passenger transport) amounts to nearly US$ 1.1 trillion. Asia and the Pacific (-70% in real terms) and the Middle East (-69%) saw the largest drops in receipts.

The extreme uncertainty surrounding the tourism recovery in the Caribbean highlights the importance of boosting innovation and supporting transformations that align tourism destinations and products with post-pandemic global demand trends, according to a report of the Inter-American Development Bank.
Most global tourism reports predict a 2-to-4-year period for a full recovery to 2019 levels. However, the Caribbean could either lead or lag the global recovery, depending upon the specific circumstances in the main Caribbean source countries and in Caribbean destinations themselves.
Imagining a Post-COVID Tourism Recovery: Regional Overview analyzes key drivers of tourism demand in the short term, including the evolution of the pandemic and the COVID-19 vaccination roll-out, the economic environment of source countries, the split between business versus leisure tourism, and airline capacity, among others.
“Over the longer term, Caribbean countries must spur innovation and reinvigorate their tourism offerings,” said Olga Gómez, Tourism Lead Specialist at the IDB. “It is no longer enough to depend on the lure of splendid beaches. Tourism destinations need to invest in improving their competitiveness, aligning their tourism products to the broader local and global economic trends, and exploring new and traditional emerging market segments such as global nomadism or nature-based tourism.”
Even for the less-tourism-intensive economies of Guyana and Suriname, where the tourism sector economic contribution is relatively small compared to the regional and worldwide averages, there is room for improving the sector’s contribution to growth and employment in the coming years.
The report is part of the Quarterly Bulletin series produced by the economic and tourism sector team from the IDB’s Caribbean Department. While it analyses economic challenges facing member countries – The Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago – many of its conclusions are relevant to the broader Caribbean region. The study contains more detailed economic overviews of the six IDB member countries.
The study presents global travel sentiment analyses and post pandemic tourism demand trends. Given travelers’ revealed preferences and the fact that most current tourism activity relies on the region’s attractive natural assets, environmental sustainability and climate change adaptation will be more critical than ever. These issues must therefore be prioritized in the public and private sector policy and investment agendas, the study says.
The report also updated the IDB’s Tourism Dependency Index, which calculates the relative dependence of over 160 countries globally on tourism for economic output, employment, and exports. Of the world’s fifteen most tourism dependent economies, eight are in the Caribbean, led by Aruba (ranked first in the world, with a score of 80 out of a possible 100 on the index), with The Bahamas, Barbados, and Jamaica joining the list of most tourist-dependent economies.
Based on a database developed from various national sources, a breakdown is also now available for tourism arrivals to the three most tourism-dependent economies. Overall, 2020 represented a contraction of international arrivals of 76 percent for The Bahamas, 67 percent for Barbados and 69 percent for Jamaica. This is in line with the estimate by the UN World Tourism Organization of a 67 percent contraction for the broader Caribbean region.
“On the positive side, firms have been adjusting business processes, and governments have been advancing in digitalization in response to the pandemic,” the report notes. “This form of innovation could lead to productivity increases that are sustained into the post-pandemic period.”

For copy of complete report click below. 

Published: Sunday | May 30, 2021
Sometime in the next 12 months, when the pandemic is fully brought under control in North America and Europe, visitors will return to the Caribbean in significant numbers.
Once that begins to happen, governments, conscious of tourism’s ability to drive rapid GDP growth, will encourage the fastest possible restoration of pre-pandemic arrival levels.
This is understandable, but begs two seemingly perverse questions: Is the basic Caribbean tourism product of sun, sand, and sea sustainable, and can the region remain competitive once present pent-up global demand is sated?
Unlike most Caribbean industries, tourism has grown in a haphazard, unintegrated manner, powering its way from the 1990s on, to dominate much of the Caribbean economy. This happened as arrangements for agriculture and commodities were attenuating, disposable income was growing rapidly in North America and Europe, and governments were happy to regard tourism as an alternative, seemingly limitless way to rapidly generate economic growth and new revenues.
The pandemic has proved conclusively the critical role the industry now plays in the wider Caribbean economy.
This suggests there is now the need to consider strategically how in future a wider product offering might encourage not only linkages with multiple sectors, but also catalyse rural development, grow transferable skills, and support newer industries in ways that better balance national economies.
Some nations like Jamaica and Barbados already understand this, but others that are also tourism dependent have not.
Helpfully, a recent report published by the Inter-American Development Bank (IDB) makes a start in identifying some of the post-pandemic responses required if the industry is to innovate and adapt its product to meet changing global demand and retain greater value.
Launching the 20-page report, Imagining a Post-COVID Tourism Recovery: a Regional Overview, Olga Gómez, the IDB’s lead tourism specialist, makes the important point that it is no longer enough to depend on what she describes as “the lure of beaches”.
“Tourism destinations,” she says, “need to invest in improving their competitiveness, aligning their tourism products to the broader local and global economic trends, and exploring new and traditional emerging market segments.”
The report outlines both a short- and longer-term agenda for recovery and change in the areas of safety, market intelligence, product adaptation, and easier regional access for visitors from the region’s main markets.
On safety strategies it proposes a common approach, intra-regional coordination, and a common brand for safe Caribbean destinations. To better understand the changing market, it suggests that sectoral analysis requires more than the use of traditional statistics, and should additionally consider real-time travel bookings, tourism expenditure data, and consumer sentiment surveys.
IDB’s short report also suggests that public and private sector policy and investment agendas should give greater priority to meeting the changing preference of travellers for nature-based tourism and experience related travel. This, it observes, makes it more important that the region protects its natural assets, environmental sustainability, and adapts to climate change.
When it comes to adjusting the tourism product to new consumer preferences, IDB’s tourism team argue for the development in the medium to long term of new tourism products to match evolving global tourism demand; including a greater emphasis on ecotourism, cultural tourism, remote working tourism, educational tourism, and retirement tourism, in the latter case linked to well-being and medical tourism.
With this in mind, it proposes the sector should place greater emphasis on the preservation of natural, cultural, and heritage attractions as “an essential element to improve tourism competitiveness”.
IDB also places stress on other changes it believes are necessary to ensure that Caribbean tourism fully recovers and remains competitive, including improved supply chain efficiencies, better destination management, and the recognition that the adoption of communication and information technologies are not optional, but “an immediate necessity”.
Unusually, the report looks at business travel. It observes in relation to The Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad that this represents a surprising 19 per cent of all travel there, compared to the global average of 22 per cent. The bank’s tourism analysts are, however, uncertain about which business travel segments will be permanently affected, as many companies are expected to continue with teleworking. More positively, the report notes that the pandemic has created a new niche demand for temporary longer-term Caribbean stays enabling remote working by professionals.
Helpfully, IDB updates its Comprehensive Tourism Dependency Index to show that of the world’s 15 most tourism dependent economies, eight are in the Caribbean. They are led by Aruba (ranked first in the world) with The Bahamas (6th), Barbados (11th), and Jamaica (13th) now joining their list. The others are Grenada (4th), Antigua (5th), St Lucia (7th), and Dominica (9th), with Belize in 15th position.
There is much that IDB does not address, particularly in relation to how a longer-term demand led approach to tourism might see supply side adaptations retain the economic and social benefits a more holistic approach to tourism development could enable.
As previously noted by this column, the pandemic offers a unique opportunity to assess how a region with billions of dollars invested in fixed tourism infrastructure might establish new linkages that go far beyond agriculture and fisheries, able to stimulate, for example, new services-based industries located away from urban centres.
What is now needed is a thoroughgoing analysis that explores how the pandemic may have structurally changed travel and tourism, and how a more strategic Caribbean approach might adapt and reposition the industry so that it better facilitates long-term domestic growth.
IDB believes that volatility will persist in the Caribbean’s path to full tourism recovery, and could take between 2.5 to 4 years, requiring firms and workers to be offered continuing support.
Common sense suggests that while everything possible should be done by governments and the industry to facilitate tourism’s short-term recovery, its economic dominance requires a detailed analysis of the existing models sustainability, and the sector’s ability to drive more broadly based prosperity.

​David Jessop is a consultant to the Caribbean Council.
Email: david.jessop@caribbean-council.org 
To access previous columns, visit: www.caribbean-council.org/research-analysis

Robert Hart: Forbes Magazine May 29 2021
​
TOPLINE
Some countries with the world’s highest vaccination rates are also battling devastating surges of Covid-19 and the highest death tolls, a worrying trend that has left experts and officials wondering whether successful inoculation drives have lulled governments into easing restrictions too soon and the public into a false sense of security. 
KEY FACTS
Uruguay has endured the highest Covid-19 death rate in the world per capita for several weeks, despite having one of the world’s most successful inoculation drives, a common situation in a number of other highly vaccinated countries like Bahrain and the Maldives. 
Uruguay, a small country of around 3.5 million people, recorded an average of 55 deaths a day over the last week, approximately 1.6 deaths per 100,000 inhabitants according to data compiled by the New York Times, a figure that has remained roughly the same since cases surged in April. 
PROMOTED
Controlling for population, Bahrain (0.9 deaths per 100,000 people) and the Maldives (1) have similarly grim metrics and have reported far greater death rates than countries like the U.S. (0.15) and India (0.29) for a large part of May.
Other countries like Chile and the Seychelles rank among the worst Covid infection surges in the world, though each have higher vaccination levels than the U.S., with experts warning that lifting restrictions too early may have made the public unduly complacent.   
Dr. Jude Gedeon, public health commissioner of the Seychelles, told a local paper the outbreak was partially fueled by the resumption of economic activity and “complacency” over public health measures like mask wearing and social distancing, a sentiment echoed to Reuters by Maldives President Ibrahim Mohamed Solih, who said the country had lifted restrictions too soon. 
Uruguay’s approach to the pandemic, which involved as few restrictions as possible, has also engendered a sense of complacency, AFP report, and the country is in a similar situation to Argentina where, despite strict restrictions in the country, many are flouting guidelines.
KEY BACKGROUND
In the U.S., as in many wealthy countries, vaccines are seen as an exit strategy from the economic and social restrictions of the pandemic. As vaccination rates rise in the U.S., experts and officials have urged people not to become complacent and for officials not to remove restrictions too soon for fear of a resurgent wave of the disease. Changes to CDC guidance allowing vaccinated people to forgo facemasks swiftly led a slate of states to rescind mask mandates—some have even banned local officials from putting their own in place—leading many to question whether a weakening of the policies is wise considering a slowing vaccination rate and persistent levels of hesitancy that could prevent the coverage needed to stop transmission. 
WHAT WE DON’T KNOW
The relaxation of restrictions is just one variable contributing towards an outbreak. New variants could drive infections—Uruguay’s outbreak is partly fueled by the P.1 variant first identified in Brazil. The efficacy of the vaccines used is also a pertinent worry, with a number of highly vaccinated countries having made heavy use of Chinese vaccines.
BIG NUMBER
50%.  Of the world’s most vaccinated countries mentioned in this story, all have at least this proportion of their population partially vaccinated against Covid-19. Data is available for Bahrain (53%), Chile (55%), the Maldives (57%), the Seychelles (72%) and Uruguay (50%). According to the CDC, the U.S. has a similar level of partially vaccinated people to Uruguay (50%), though a much higher proportion of fully vaccinated people (40% against Uruguay’s 29%).
WHAT TO WATCH FOR
Bahrain’s health ministry undersecretary Waleed Al Manea attributed the country’s surge in cases to more testing and the large gatherings associated with the holy month of Ramadan and Eid al-Fitr celebration. However, Bahrain, alongside the nearby UAE, is already offering booster shots for the heavily used Sinopharm vaccine (which already requires two doses), amplifying worries it may not be as effective as others on the market at preventing the disease. A third of Seychellois cases are among vaccinated individuals, the country’s health ministry revealed in mid May and the majority of vaccines given were also the Sinopharm vaccine. The WHO said it would review cases from the archipelago in light of this.   
SURPRISING FACT
Polling in the U.S. indicates unvaccinated people are more likely to be comfortable engaging in everyday activities than their vaccinated compatriots, a potential issue for the states relaxing pandemic restrictions based on high vaccination rates.
 

​But travel rules are holding up a restart in North America.
The Economist: May 29th 2021 edition
The latest addition to the fleet of Carnival, the world’s biggest cruise operator, is the Mardi Gras. This ocean-going playground for 5,300 passengers comes complete with six different zones, including a “French Quarter”, two dozen restaurants and a rollercoaster. It is set to arrive at its base in Florida in early June. That is a year behind schedule—but possibly just in time for a revival of the industry, which has been hit harder than just about any other by the pandemic.
Holidays afloat gave an early hint of covid-19’s damage to international travel. Images of passengers stranded aboard modern-day plague ships prefigured lockdowns on land. Most pundits reckon cross-border tourism will not fully rebound until 2023. Yet cruising may steam ahead before then. “Where else can you go to bed at night and wake up every morning in a different, new, exciting place?” ventures Arnold Donald, Carnival’s boss.
A break at sea is a small niche of the global tourist industry. Of the 800m or so foreign holiday-makers in 2019, only around 30m ascended a gangway. It was, though, growing fast, adding over 10m more sea faring tourists in a decade. And before the pandemic drowned the business in red ink, it was lucrative. The three companies that transport three-quarters of all passengers—Carnival, Royal Caribbean and Norwegian Cruise Line—raked in combined operating profits of $6.6bn on revenues of $38bn in 2019.
With fleets mostly idle in the past year, cruise operators have been burning cash. Only a few of the world’s 270 large cruise ships are at sea with paying passengers. Luckily for Mr. Donald, investors seem to share his belief that the industry will roar back full-steam ahead. Carnival has had little trouble raising $24bn of debt and equity over the past 12 months to tide it over; its rivals have also been able to tap the market.
Now demand is returning. Carnival’s bookings for 2022 are back at the higher end of historical trends, its boss reports. The industry continues to expand long-term capacity. Over 100 vessels are on order; none has been cancelled during the pandemic. Perhaps the biggest headwind is countries’ fast-changing rules for international travel, especially in America. Half of all tourist seafarers are North American, double the number of Europeans, the next largest group, with China and other emerging markets far behind for now. Since the pandemic no ship has been allowed to set sail from an American port.
Mr. Donald hopes that will change soon. Big cruise firms are trying to move things along by lobbying governments to allow vaccinated passengers who test negative for covid-19 to come onboard. That makes recent efforts by lawmakers in Florida to ban companies from using vaccine passports rather unhelpful. The Sunshine State is home to not just the Mardi Gras but also to America’s largest cruise ports. 

May 20, 2021 | Podcast
By Alex Dichter and Robin Riedel McKinsey & Company.
The COVID-19 pandemic decimated airlines in 2020, yet there are reasons for optimism as the industry looks to recovery.
In this episode of The McKinsey Podcast, Diane Brady speaks with partners Alex Dichter and Robin Riedel about the outlook for airlines and other industry players. An edited version of their conversation follows.

Diane Brady: Hello, and welcome to The McKinsey Podcast. I’m Diane Brady. During the COVID-19 pandemic, few industries have been harder hit than airlines. As we recover, few will have more challenges getting back to normal. Joining me are two McKinsey partners who have been working on these issues for years. Alex Dichter is a senior partner in London who leads McKinsey’s Travel, Logistics & Infrastructure Practice. Robin Riedel is a partner in McKinsey’s Aerospace & Defense Practice who leads the advanced-air-mobility group for the McKinsey Center for Future Mobility out of San Francisco.
Alex, let’s start with you. Give us some sense of the current state of air travel.
Alex Dichter: Most of the world’s travel went to almost nothing in April and May [2020]. At one point, we were running at about minus 95 percent, if we compared traffic in 2020 to 2019 during the same period. Obviously, some parts of the world have gone back to some degree of normalcy. If we were to look at air travel in mainland China, for instance, where the virus has been well contained, domestic travel is near normal. New Zealand and Australia, at least internally, have gone back to something that starts to look and feel like normal, and the US has some domestic traffic.
For virtually every other part of the world, what’s stopping international travel, and to some extent domestic travel, is the wide array of restrictions associated with travel. Everybody wants to go on vacation. Everybody wants to see their friends and family. But if you have to get tested and quarantine on the way back, it starts to look like a daunting task. That has kept international travel to a near minimum. In fact, one of the only reasons that we see a reasonable number of long-haul flights still in place is that cargo demand is relatively strong.
An industry hit hard by COVID-19
Diane Brady: This is an industry that has felt vulnerable for years, even before this degree of disruption. What is the economic fallout?
Robin Riedel: To put it into numbers, and just for last year, 2020, the estimated impact on airlines is about a $370 billion revenue loss versus 2019.
It’s a massive hole that the industry’s in, and that’s just the airlines. You also have the supply chain and other sectors or subsectors. You add all of that together and you’re getting close to half a trillion dollars of losses across the airline or air-travel industries. That loss has impacted the companies, on the one hand, but also the employees, on the other. We’ve seen pilots, flight attendants, mechanics, and all kinds of workers lose their jobs over this crisis, and with an unclear path to come back.
The question of how many airlines will survive, to a large degree, will depend on some of the government support that is out there, what the recovery really will look like, and whether we will see a significant jump back to pre-COVID-19 levels of this year, or whether it will take until ’22, ’23, or even ’24 before we’ll see travelers and revenue come back.
Looking ahead to recovery
Diane Brady: Alex, can you give us some sense of what normalcy will look like?
Alex Dichter: Predicting the future is always a dangerous game. There are two fundamental axes here. One is the degree to which the world recovers from the economic fallout associated with COVID-19, and two is the speed at which we put the virus functionally behind us.
It’s clear that the virus is lasting much longer than we all hoped it would back in March or April of last year. It’s equally clear that the speed at which vaccines have been developed has surprised a lot of people.
We’re starting to see some light at the end of the tunnel, even if the remaining bit of the tunnel is still long. While the economic fallout has no doubt been significant, we’ve not seen a crash in global markets, for example, and asset prices have continued to hold up.
Corporate balance sheets are also relatively strong, so there’s good news amid the bad. Our more pessimistic scenario would have demand not recovering until 2024. If you were to double-click on that, you’d see a much faster recovery for leisure traffic than you would see for business traffic.
Businesses, even if they’re financially healthy, have all learned that technologies like Teams and Zoom and Webex are working relatively well and can replace some of the travel that they used to do. Technologies will likely replace that travel in the future.
The more optimistic scenario might have us back to normal, or at least back to 2019 volumes, by the end of 2022. The one caveat I would make is that in this industry, you can’t have more passengers than you have seats. This is an industry where we make relatively important decisions about capacity with long lead times. You can’t snap your fingers and bring back planes that you’ve parked in the desert. To recall furloughed pilots, it takes time. Even if demand comes back sooner, it may be that we don’t see the volumes come back until well into 2023, simply because the industry isn’t yet prepared to accept those passengers.
This is an industry where we make relatively important decisions about capacity with long lead times. You can’t snap your fingers and bring back planes that you’ve parked in the desert.
How employees are coping
Diane Brady: Robin, you’re out there on the front lines, talking to executives, employees, and engineers. Can you give us a sense of just what people have been doing to cope and survive this?
Robin Riedel: It’s a really challenging time for the executives of these companies and for the employees. I’ve been heartened by many of the actions we’ve seen where companies really have stepped forward to try to protect jobs as much as they could.
Employees and their unions have leaned forward to find creative arrangements that will protect jobs, help the companies survive, and work much more hand in hand than they have in the past. There have been a number of deals that reduce flying hours for individual pilots, keeping the overall number of pilots at a higher level—or reduce certain compensation packages for the short term so that the financials work out in these difficult times. That has been heartening to see. At the same time, we’ve seen massive layoffs despite all of that.
In particular, on the pilot’s side, it’s a challenging situation. As a pilot, you need to remain certified and stay in the role to feel comfortable flying. Many pilots who have been laid off don’t really have an opportunity to go somewhere else to fly.
They’re probably going to spend a year or two or three not flying before they get recalled. By then, they might have switched into another industry. They might feel that they have really lost skills and need significant training to come back to flying. There’s a good chance that this will cause what we would consider to be a pilot shortage in a couple of years, simply because there are enough people leaving the industry as a result of all of this.
Leisure travel makes a comeback
Diane Brady: Alex, you mentioned the shift between the ratio of leisure to business. Airlines are constantly innovating on that front. I remember talking to somebody at a café once even about how they place the bathrooms, and how many bathrooms they have on different flights depending on how much beer people drink. How is this shifting the focus of the investments that these airlines are making, both now and in anticipation of a recovery?
Alex Dichter: There are a number of changes. On the investment front, it really depends on what kind of airline you are. Certainly, there are airlines whose hubs are in cities with enormous volumes of high-end business traffic: the banking sector, the consulting sector, the legal sector. These people historically have flown a lot, and they typically fly at the front end of the cabin. You would see airlines where the number of business-class seats could exceed the number of economy-class seats.
Many of those companies will struggle to fill those cabins in a post-COVID-19 world at first. We will see a shift in thinking about that. Over the past several years, one of the biggest growth segments that we’ve seen has been high-end leisure.
These are not necessarily very wealthy people, but people who see travel as the most important use of their disposable income and are willing to splurge for a better experience. If you looked across business-class cabins of many airlines over the past few years, you would’ve seen a number of people with loosened ties and their laptops out. But you’d also see couples clinking their champagne glasses and families and honeymooners and retirees. That will be a really important segment post-COVID-19. While a hundred business-class seats in some cases may be too much for that segment, 50 certainly isn’t.
The corporate market tends to pay very high prices, and they tend to book relatively late. It wouldn’t be unusual to look at a flight between London and New York a month out and see that the seat map is two-thirds empty, only to find it relatively full on the day of departure.
Leisure passengers tend to book earlier. Historically, airlines have held back on the number of leisure passengers that they would allow into those seats, waiting for corporate travelers to show up. We may see a shift in that dynamic, where we allow more seats to be sold earlier, perhaps at lower prices.
With that might come a shift toward point-to-point traffic, people who are actually going between London and New York versus people who are connecting through London from another market. All of that will likely result in lower average revenues, but it doesn’t have to result in dramatically lower average revenues.
Pricing in a world without precedent
Diane Brady: Robin, I’ve been looking at seat sales to Miami from New York, for example, for $60 round trip. It does feel like it’s going to be hard to wean people off of some of these extremely low fares that we’ve become addicted to in the past few years, even prior to the pandemic. What do you see there in terms of pricing power?
Robin Riedel: On the pricing side, the challenge we’re having is that the systems that manage the pricing, revenue-management systems, and pricing systems, in many cases, rely on past information and past data. However, past information is not that helpful right now to figure out what passengers really want or what people are willing to pay.
What we’re finding with our clients is that customers are much less elastic than they were before. Before, you could throw out a very low fare and people would flock to it. Right now, it’s not necessarily the fare that makes people travel or hold them back, but it’s the fear of getting infected or the fear of being away from home and the door shutting on them. Pricing is a very challenging topic right now where there’s very little precedence we can rely on.
That being said, airlines are making some progress in using what we would call nontraditional data sources and really trying to understand what drives willingness to pay. What are customers really looking for and willing to pay for in this new scenario? Airlines are looking at search trends, looking at customer sentiments, and looking at how people search across a website.
All of those kinds of things are starting to flow into the revenue-management systems and will hopefully help us manage prices back up to a more sustainable level, instead of lowering them and lowering them, trying to stimulate traffic that is really not that possible right now.
‘Working around the clock’ on sustainability
Diane Brady: Alex, I know you’ve done a lot of work with McKinsey regarding sustainability. COVID-19 has almost distracted us from what a terrible year 2020 was. I think it was the hottest year on record.
The airline industry has been front and center, both as an emitter of greenhouse-gas emissions and as an innovator on that front. Has COVID-19 shifted the focus of the industry on this issue?
Alex Dichter: Yes and no. I don’t know a single CEO who believes that sustainability is not coming back to the agenda as a critical topic. It is something that our corporate clients are demanding, and our corporate clients are demanding it because their employees and their customers are demanding it of them.
The good news is that those who are working on technology innovation—the development of sustainable aviation fuels, the use of hydrogen, electrification, and such—have been working around the clock and haven’t taken any time off.
Robin Riedel: There’s almost not a week right now where we’re not meeting with senior executives in the industry talking about sustainability. I’m both surprised and excited about the fact that this is happening, and that COVID-19 has not made this a second-order item. It’s still on the top of the agenda for many of the industry executives.
We see airlines all over the world wondering what to do. Some are working with offsets, and some are working by buying sustainable aviation fuel and trying to spur that industry. Some are investing in future technology for propulsion, whether it’s electric or hydrogen combustion or similar technologies. We’re seeing an influx of investment in that sector.
The promise of personalized air travel
Diane Brady: There was so much excitement around personalized air travel before the pandemic. Are those conversations taking a backseat to recovery? Or are we still seeing the investments in AI [artificial intelligence] and some of the other areas that might advance air travel beyond where we are today?
Robin Riedel: We’ll have to separate these future models, which are a shorter distance. Some people would refer to them as the equivalent of flying cars. These are smaller aircraft that fly, let’s say, up to 300 or 500 miles.
That is a new industry. It’s driven by a number of major trends, one being electrification and battery density. We’re getting to a point when it becomes technically feasible to have vehicles that operate that way. There’s also the drive for more sustainability.
The advance of AI makes some of this more effective. Last, but not least, is the interest of the customer to look at mobility as a service. Customers no longer just want to own a car and drive everywhere, but to hail a rideshare or look at sharing different modes.
When taken together, these trends create a fertile environment for a new mode of air transportation. We track more than 250 companies out there that are trying to play in the space. There are probably about a dozen or so of them that have significant funding by now.
We see a number of prototypes flying around. There are real expectations that in the next three to four years, we will see the first commercial models of these arrive in our cities. What form that will take, whether it’s helicopter-like from one rooftop to another, or a regional model that uses airports or airport-like infrastructure to go from one city to another, is to be seen. All of these have some promise. The devil is going to be in the execution and in the detail, but it surely is an exciting time for that space.
Diane Brady: How is that picture changing, especially in a part of the world where air travel is more back to normal?
Alex Dichter: Over the short and medium-term, we see some clear shifts.
We’re seeing a bias toward fewer flights and typically larger aircraft. Get as many people as you can on each one of your relatively few flights. The other reason for that is there is cargo demand. Larger aircraft do a better job of accommodating cargo than do smaller aircraft.
As we look forward, we’ll see airlines looking for more fuel-efficient aircraft. They will be looking for aircraft with more customer-friendly features like Wi-Fi and upgraded business-class cabins and bigger overhead bins.
The interest in 100-seat aircraft will exist for some of the same reasons that were the case before COVID-19. Those aircraft are very useful at filling in city pairs that demand a lower cost structure than can be achieved with a 50- or 70-seat aircraft but don’t need 140 or 150 seats in order to achieve reasonable load factors.
The only thing that the industry expects to change is the amount of global investment in long-haul wide-body capacity. The reason for that is pre-COVID-19, many of the world’s airplanes that were flying on long-haul routes were losing money.
They were losing money because they were flown by relatively small airlines, in many cases backed by states, whose objectives went beyond profit. It was important to have these routes for political reasons: for pride, national sovereignty, and, in some cases, thoughtful links to economic development. Many governments are coming back around and saying, “Look. We’ve got a lot of priorities for a stretched state’s treasury. We’re not going to be able to keep funding loss-making operations forever.”
We’re seeing more and more governments asking their state-linked airlines to come up with plans that enable them to be financially sustainable. In many cases, that will mean smaller long-haul networks with fewer aircraft, which is good for carbon emissions, but probably not great for long-haul ticket prices.
Diane Brady: You both must be road warriors who also had your plans and travel put on hold. I’m personally very eager to get back on a plane again. Is that something that you welcome?
Robin Riedel: Yes. It’s a bit of a mixed bag. On the one hand, I’m glad to be home more right now. We have an infant in the house. It’s fantastic to be between meetings or at the end of the day and to be able to see my son. I appreciate not being on the road all the time anymore.
At the same time, I truly miss seeing my clients and my friends and my family. I just did the math the other day and this is the longest I’ve gone without seeing my parents in my life. That weighs heavily on me. There’s some positive and some negative in the lack of travel right now.
Diane Brady: What about for you, Alex?
Alex Dichter: First, prior to COVID-19 I was traveling more than virtually anyone that I’ve ever met. Typically, I would be in three continents in a week. I sleep well on planes. My pattern would be, I would get on a plane at night. I’d go to sleep. I’d wake up in another continent. I’d have a full day of meetings. I’d get on another plane that night, go to sleep, wake up on another continent, and end up back at home Thursday night or Friday morning. That allowed me to cover a lot of ground, see a lot of people, and do so in a way that was relatively sustainable from a lifestyle standpoint. Remember, I sleep well on planes, so I got as much sleep on the plane as I would typically get at home, and in some cases more. That has changed dramatically.
I have been on a few flights, particularly on the long haul. As an aside, some of the conversations I’ve had with crew have really been touching. I was on a flight between the US and London with eight passengers on board. The crew were practically in tears. It was their first flight in months. They understand very well that without passengers, they don’t have a future. I certainly hope for their sake that we see as much of the demand coming back as possible. Like Robin, I see some benefits to this.
I find interacting with my colleagues, whom I know well, to be much more efficient via these kinds of technologies. I don’t need to read their body language. I do want to see them on some cycle, but we can get a lot done very quickly.
The fact that nobody is traveling also means that calendars are much less rigid. If I want to get a client together with me for a discussion, I usually find an hour within a couple of days. In the old world, we’d often go back and forth for a couple of weeks trying to match up calendars and find a time when we could both be in the same spot on the globe when neither of us were someplace else.
That will be something that I don’t want to give up. At the same time, I am in this business because I want to help people. I like people, and I like getting to know my clients on a personal level. That is hard to do via Zoom.
I will do a lot less internal travel. I will replace some of that space with more client travel. The other thing that I’ve noted, and I’ve heard others say the same, is that in the future, I may need to see in person everyone in my personal network less frequently. Every two out of three interactions we can do remotely, I’m also meeting more people.
I wouldn’t be surprised if a couple of years from now, you find me doing as much travel as I was doing before, but perhaps getting more out of it.
What industry leaders should know
Diane Brady: To those in the industry, any advice?
Robin Riedel: There are a couple of things worth keeping top of mind here. One, making sure to understand what are the relative risks and what does the latest research show about what is considered safe, or what is relatively safe, versus what is risky behavior? Even within travel, with the many studies that have been done, there’s enough evidence to show that air travel is relatively safe, and you can protect yourself with a few measures.
The second thing is to really think through what is essential travel; how do you define that, and guide your organization? The questions are going to be, “How do you roll back into travel? Do you just go back to where you were before, or do you adjust your travel policy and make some adjustments for things like safety, the environment, and how we’ve all learned to work with modern technology to avoid some of the travel?”
Diane Brady: Alex, anything you’d want to add?
Alex Dichter: Everyone needs to be prepared for a two-speed recovery or return over the course of the next 12 months. None of us really know how the summer is going to play out.
Expansion may prove to be complicated. When demand falls off, your reduction in capacity trails the falloff in demand, almost by definition. When there are fewer people on planes, you reduce flights. As you reduce flights, you reduce pilots.
When demand comes back very quickly, by definition, it will come back faster than you can bring capacity on board. At a time when airlines are going to be looking for as much goodwill as they can get from governments, labor unions, and their passengers, there’s a very high risk that we’ll see long queues in airports, lots of delays, and canceled flights. We’re simply not ready for the demand that appears, and I wish I had a better answer as to which one to prepare for. We need to be ready for both.
I would also leave airline executives with a longer-term thought. I hope that five years from now, everyone will still be talking about COVID-19 agility. What I mean by that is the speed at which we were able to get difficult things done during COVID-19.
Many airlines have moved to a world where what used to be eight-week, 12-week planning cycles are now done in one to two weeks.
My hope is that we retain some of these learnings, and maybe move to a world where we stop telling ourselves that every major innovation needs to, by definition, take several years to implement. We can start acting a little bit more like digital leaders, who tend to get things done quite quickly in a trial-and-error kind of way. I’m speaking more about the commercial side than I am about operations, where safety is paramount in our industry.
How COVID-19 has driven industry innovation
Diane Brady: Can you give me some sense of what’s on your radar and what you’re watching over the next year in general with regard to the industry?
Robin Riedel: There are probably four or five different themes here that are becoming important into 2021 beyond COVID-19. We need to get more serious and find better ways to abate some of the carbon we’re producing.
A second theme will be what we call the future of air mobility: the Electric Vertical Takeoff and Landing [eVTOL] space or advanced-air-mobility space.
Another theme we haven’t talked about is cargo transportation by drone. We’re seeing a broad number of trials around the world where vaccinations or blood transfusions, or even medication and e-commerce packages, are transported by drones over the short range or over the long range for the last mile.
In the more traditional airlines, customer experience is going to be one to watch. As we come through COVID-19, smart airlines will take this as an opportunity to make things not just safer but also better. Whether that is self-service at the airport, some of the digital offerings they have, or onboard product, we’re seeing a number of changes coming that will make travel better in the future.
Diane Brady: Alex, what would be on your radar for people to watch over the next year?
Alex Dichter: I’m hopeful that we’ll see a couple of things. We’ll start to move from a world where the industry is focused on survival to a world where at least parts of the industry are focused on long-term success.
Let’s recognize that this is an industry that, for the better part of its 75-plus-year existence, has not made a dime. Part of that has to do with a very challenging structure: too many airlines, outdated regulations, very powerful supply chains.
I’m looking forward to some of the innovations that will naturally come out of this. Several of the changes that the industry has put in place during COVID-19, particularly moving from physical touchpoints to digital touchpoints, are hugely relevant. Digital technologies allow people a sense of control and transparency that I think everyone wants. As a passenger, I’m looking forward to some of those changes.
Diane Brady: So much fodder. If you’d like to hear more, please do go to McKinsey.com. We’ve been speaking with Alex Dichter and Robin Riedel. Alex and Robin, thank you so much for joining us.
Robin Riedel: Thank you for having us, Diane. It was a pleasure.
Alex Dichter: Thank you, Diane.