What challenges await Australia's travel sector in 2022?

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What challenges await Australia's travel sector in 2022?

Travel could be hit once again in 2022.
Image source: © 2022 Kalkine Media®

Highlights

  • Prior to the Omicron outbreak, speculations were largely titled towards 2022 being a successful year for the travel sector.
  • The government has prioritised bringing citizens back into Australia rather than supporting those who wish to move out.
  • The travel industry faced a high level of uncertainty during the pandemic, with almost a third of skilled workers losing out on their jobs.

The travel industry is eagerly awaiting its post-pandemic revolution that could change the game for the industry. Despite many radical changes brought by the pandemic, the travel sector has not seen a significant turnaround amid international border closures. Before the Omicron variant fear took control, speculations were largely titled towards 2022 being a successful year for the travel sector. However, expectations about the sector’s revival are once again waning as economies struggle to understand the full effects of the Omicron strain.

The ASX-listed travel shares inched higher in December amid high Christmas spirits, and a quick recovery from the pandemic-induced slump was prevalent. The lower rate of hospitalisations associated with the Delta variant was one of the key reasons behind optimism for the Australian travel industry in 2022. Additionally, easing international travel restrictions helped strengthen the travel sector outlook. Having said that, the industry is still facing some fundamental challenges that can obstruct its ongoing recovery.

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Lack of government attention

Some experts suggest that the lack of government attention has been a significant factor behind the slackening performance of the travel sector. While the pandemic was a heavy shock for the industry, the government support for the sector has been somewhat uneven. Particularly, the government travel relief plan is more favourable towards inbound tourism.

Fiscal support for outbound travel is essential.

During the initial stages of international border reopening, the government has prioritised bringing citizens back into the country rather than supporting those who wish to move out. The Federal Government’s Aviation Recovery Framework promises AU$109.6 million worth of financial support over the existing AU$5.3 billion fiscal relief already provided. Despite the boost, the fiscal package does not support outbound tourism, raising questions over the efficiency of inbound flights to repair the battered travel sector alone.

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Shortage of skilled workers

Lack of adequate workers has become a persisting issue for multiple sectors across Australia. The aviation & travel industry is no different. The travel industry encountered a high level of uncertainty during the pandemic, with almost a third of skilled workers losing out on their jobs.

While demand may not be a big issue, companies supplying travel services have had to modify existing strategies to make up for lost labour. At the same time, the aviation industry needs highly skilled personnel to perform the required duties. Notably, the issue of staff shortages can be addressed if increased attention is paid to skill-oriented packages and grants by the government.

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Omicron variant

The Omicron variant largely remains a loose cannon, as it has not fully disclosed its traits in front of the world. Despite some experts suggesting it as a relatively milder wave, people are taking the previous two years’ experience as a cautionary tale and staying indoors. More and more people are preferring the work-from-home setup and showing less interest in field-based roles.

 The new variant still remains a mystery.

Consequently, workers have been shying away from working in roles that can have a detrimental effect on their well-being. Besides, workers are exploring opportunities in sectors other than travel due to the mass, unprecedented layoffs that have occurred within the tourism sector.

RELATED READ: How is Omicron variant impacting aviation and travel stocks?  

Overall, another period of tough times may be ahead for the travel sector. The nature of the pandemic is such that travel and tourism are no longer limited by means of money but by health and wellness too.

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