International Travel Demand to the US Should Be an Enormous Concern

With so much uncertainty surrounding travel and visa policies for people coming to the US, demand has unsurprisingly started to drop. If I’m a US-based airline, this is one of the most concerning potential issues out there today.

Since Trump’s election, business sentiment has been broadly positive with hopes and dreams of loosened regulation, lowered taxes, unicorns, and rainbows without any harm being done elsewhere. That’s nice, but it’s also ignoring the elephant in the room. Trump made a pledge to tighten up on immigration, and open borders are tightly tied with travel demand. His early attempts to fulfill that promise have been sloppy and problematic, causing a tremendous amount of fear and uncertainty around the globe. If it continues that way, this could quickly wipe out any potential gains from business-friendly tax and regulatory policies.

We all know that when the White House hastily announced a ban on travel to the US from 7 predominantly-Muslim countries, chaos followed. It was unclear whether existing green card/visa holders were allowed back and whether this was temporary or not. It wasn’t long before the judiciary stepped in to block some of the most visible policy changes, but damage had already been done.

According to a study of travel agent booking data from ForwardKeys, bookings for travel to the US dropped sharply in the 8 days following the signing of the executive order.

Naturally, travel from those 7 countries tanked with new bookings down 80 percent. But more concerning is the impact that this has had on travelers from countries where there weren’t any changes to policy.

Globally (excluding China due to year-over-year issues with holiday timings) in the 8 days since the ban first went into place, inbound bookings to the US dropped 6.5 percent compared to the same period a year prior. Outside of the Middle East, hardest hit were bookings from Asia/Pacific ex-China (down 14 percent), Western Europe (down 13.6 percent), and Northern Europe (down 6.6 percent.) Here’s a graphic from the report that shows the various regions.

Another way to look at this is based on forward bookings. Right before the ban went into effect, global bookings to the US were up 3.4 percent for the following three months compared to the year before. Just 8 days later, bookings were up only 2.3 percent for the following three months.

Some of this slowdown could, of course, be attributed to the initial shock of the order. Maybe things will rebound, but it’s clear the Trump administration isn’t done tinkering here. There will be more restrictions coming on travel to the US, and that means the perception that the US is closed for business will spread. This could have a far-reaching and long-lasting impact on demand.

Won’t this hurt foreign carriers more than US carriers since US carriers are more likely to carry US passengers who aren’t impacted? First, I suppose it’s important to point out that US travelers may very well be impacted in the future. Some countries retaliate when this kind of thing happens. (Remember Argentina’s “reciprocity” fee?) But even forgetting about that, the US carriers will still feel the pain.

Remember, the US airlines have spent a great deal of time forging joint ventures with foreign airlines. If Air France/KLM/Alitalia/Virgin Australia/Aeromexico/Virgin Atlantic suffer, so does Delta. If British Airways/Iberia/Finnair/JAL/maybe LATAM/maybe Qantas suffer, so does American. And if Lufthansa Group/Air Canada/ANA/Air New Zealand suffer, so does United. Beyond that, Alaska/Virgin America and JetBlue are heavily dependent upon foreign airlines feeding people on to domestic flights. If those dry up, those airlines will certainly see demand drop.

Fortunately for airlines, their assets are airplanes, and airplanes can move. But there is already overcapacity in the Atlantic today. If demand starts to shrivel further globally, then there won’t be a lot of places to move those airplanes. Sure they could shift some flying back into the domestic market, but there’s only so much capacity domestic markets can absorb. And that means even Southwest, which has the least global exposure in the US, would start to hurt from excess capacity moving back home. In a worst case scenario, airlines could simply decided to start retiring older widebodies instead of flying them at a loss, if things get bad enough.

It is early to start predicting doomsday scenarios like that one, but there is just no clarity on what the administration is going to do next. What is clear is that Trump isn’t done trying to slow immigration, and that will hurt broader travel demand. If the orders continue to implemented like the last one, the pain will be even more pronounced.

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70 Comments on "International Travel Demand to the US Should Be an Enormous Concern"

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Gantt
Guest

Alarming

Itami
Guest

This would be a great article to pair with your earlier series on US airlines’ fleets. If this does represent more than a blip in demand trends, then the carriers with the largest order books and the most aircraft-related debt will be in the least advantageous position.

Tim Dunn
Member
Problem is that these surveys don’t normalize for other factors including the stronger dollar. On a year over year basis, the dollar is stronger than it was a year ago for many currencies… with notable exceptions such as from some countries of S. America…. not surprisingly, travel from the Americas is stronger. Yes, there was a shock factor and some people did sit out the booking process waiting to see what would happen. But most Europeans don’t need visas to enter the US and there was nothing in what the White House did that affected European tourism to the US.… Read more »
Frankly
Guest

Europeans may not need visas to enter the US, but when former Prime Minister of Norway is held and interrogated by CBP, it sends a strong message to all Europeans.

Tim Dunn
Member

and most European citizens have not been to the Arab Middle East which IIRC was the reason he was detained,

Harrold
Guest

I’ve been to Turkey and seen plenty of English tourists drinking it up.

Tim Dunn
Member
Not only was Turkey not part of the short-lived 7 country travel ban, it is as much European as part of the Middle East and many Turks do not see Turkey as part of the Middle East. Ugur Mumcu, investigative journalist and sometime philosopher, famously quoted a magazine that described Turks as, (my translation) “A person who is married according to Swiss civil law, punished according to Italian criminal law, tried in accordance with German statutes, administered according to French administrative law, and buried in accordance with Islamic law.”  I don’t speak for most Turks, but I have come to… Read more »
Jon
Member
Exactly this. Moreover, Trump insists that more countries will come under the ban, and further insists on creating a new Executive Order to replace his illegal one. No one wants to buy tickets for months from now while they’re seeing countries seemingly irrationally being banned from travel to the US. If you were planning on visiting the UK and they suddenly banned Mexico from travel out of nowhere and with no clear event to cause such a ban, you’d probably hold off blowing a few grand on hotels and airplane tickets and may just choose to go to someplace else… Read more »
Mr Debenham
Member

Drumpf, it’s clear you have a limited and incorrect understanding about the Presidents temporary travel restriction from certain countries. Countries are not being banned. Neither are the people in them, so stop making up rubbish.

Edward Tomlinson
Member

Tim, another problem is that these surveys don’t account for the fact that many, many people in Europe (and around the world) look at that man in the WH & the gang of thugs he has surrounded himself with & have decided that they would rather visit pretty much anyplace else rather than be subject to whatever sort of shakedown the US govt. decides to impose. Of course, there is an untapped skinhead market in many of these countries, so perhaps a “Strength through Joy” promotion would help the travel industry…

A
Guest
Correlation does not imply causation. I know that it seems everyone wants to pile on Trump and blame him for everything but I hardly think a temporary travel ban (which has been blocked) is the reason bookings from western europe are down. Of the 7 countries that Trump put travel bans on I hardly think that US tourist destinations like Orlando and Las Vegas were concerned nor were Fortune 500 US businesses. This is sensationalism at its best. Yesterday I read that a Canadian school was putting any school trips to the US on hold due to “political instability.” Oh… Read more »
Jon
Member

You’re definitely right.

Clearly the actions of the President of the United States of America have zero impact on people’s desire to go to the United States or their view of the United States as a place to spend their money.

Clearly.

Just like Putin’s actions i presume have zero impact on your desire to travel to Russia anytime soon, or to invest money in russian business.

Paul
Guest
Actually, tourism to Russia is up considerably, particularly among Asian visitors, who view it as a safer, more secure place to travel than the rest of Europe. A tourist bus full of South Koreans was robbed this week in Paris; it’s front-page news in South Korean media. Last year tourists from Hong Kong were attacked with an axe on a German train. Western Europe is increasingly perceived by Asians – who, by the way, are some of the world’s most prolific and free-spending travelers – as unsafe. Incidents like that hurt much more than what any one politician is or… Read more »
Marissa
Guest

I have to agree with Paul. Early last week I was robbed for the first time in my life in Copenhagen in broad daylight by a gang of east Europeans. They told me the city was one of the safest in Europe before I went. Guess where i am not going in the future any time soon?

As a statistician i can tell you that all the other points raised here are valid. When we have more data–say 4-6 weeks from now we’ll be able to figure out if it’s mostly those other factors or stuff that the WH is doing.

JoEllen
Guest
I totally agree with you. People have totally over-reacted it’s called being guided by fear. In a week’s time the ban was (temporarily) lifted…..and, sorry, I don’t take it as a “Muslim” ban but just as President Trump calls it, for National Security. Who else but Muslims live in these 7 countries in the first place, with few exceptions, but Muslims ! ?….so right away people want to call it a Muslim or religious ban instead of what it actually is. I’ll say it out loud,…the majority of terrorists are in and have come out of Middle Eastern countries –… Read more »
jboekhoud
Member

If it were really about security, he’d have banned people from Saudi Arabia. More terrorists have come from there than any other country as I recall.

Haolenate
Guest

Not true. We have amazing cooperation with the policing bodies in the UAE, Saudi Arabia, Pakistan, and Indonesia so we can get a better picture of someones history when entering the US.

I guess Rachel Maddow forgot to include Comey’s statements to Congress that we have a hard time vetting people from Syria, for example, and that the process is not as well oiled and proper as other countries.

Oliver
Guest
Marks
Guest
There’s a number of issues such as high healthcare and accident insurance costs as well as a high dollar. However, the suddenness of Trump’s ban, plus the arbitrariness (the countries banned weren’t the ones where most terrorists came from), would make most people think twice about coming to the US till things come a bit clearer. The reasoning being that it’s easy to put off a trip to the US for now, go somewhere else cheaper and more welcoming this year, and then see how things pan out after a year of Trump’s Presidency. Thus, if it looks like the… Read more »
cahilldot
Member

agreee with youA

DOTTI

miguel de la o
Guest

Now it is hindsight but the “edict” was startling in it’s immediacy – for a country which has
had a reputation for hospitality. Just slam the doors shut without warning. The message is “what door next.”

Jason
Guest
Is cutting capacity and parking less efficient airplanes really a problem in the medium to long term? DL, AA, and UA have all been doing that domestically for years and they are arguably as strong as ever. Schedules can easily be changed for flights that are over 4 months or so from now, and fares will just change to match capacity. Also, while the -37% from the middle east is significant (although maybe not in absolute passenger numbers, just %), the other numbers could be caused by other things such as other economic issues, currency values, changing airlines/routes/capacity, Brexit for… Read more »
Jon
Member

The article already focuses on the bookings shortly prior to the ban as well as after the ban, in addition to the year-over-year numbers.

Maybe I’m not aware of any other sudden economic events during that same time frame that are affecting those global travel numbers. Silly lib media must be sittin’ on that.

Tim Dunn
Member
Even if the ban was not blocked by the courts, it was originally only a 90 day ban and it also happened in the dead of winter. Inbound travel to the US in the winter is heavily foreign point of sale while the opposite is true in the summer. There are 5.4% more seats between the US and Europe in the 3rd quarter of 2017 compared to 2016 but there 3.5% more seats this winter compared to winter 2016. Notably, though, the US airlines are leading the reductions this winter because low European fares due to a weak Euro mean… Read more »
Jon
Member
Not everyone buys their tickets within 90 days. Family / leisure travel in particular is booked 90+ days out. A short term travel ban came with no warning, which is what concerns reasonable-minded people. Travelers who booked travel 6 months ago, who had everything ready and followed the rules suddenly found themselves having spent their hard earned cash on flights and hotels, but were suddenly and without prior notice banned from travel due to no action of their own and no specific event to identify as a cause, beyond the assumption of office of a new Dear Leader. I do… Read more »
Tim Dunn
Member
I’m not doubting that there are people who have concerns about the current resident of the WH and they are trying to figure out what that means to their futures…. that is true on Wall Street, Mexico City, and in plants across China. But simply citing a year over year statistic that isn’t adjusted for the change in bookings that was already taking place doesn’t tell the whole story and without the whole story and all of the facts, there is no way of being able to know the full extent of what the travel ban has done. And even… Read more »
Anonymous
Member
See http://www.zdnet.com/article/three-bills-and-a-trump-executive-order-train-their-gun-sights-on-the-h1b-visa/ Quote…”While the wording on the draft doesn’t reveal too many details about possible changes in the H1B, it does apparently propose numerous changes to many of the other visas that are important to the tech community such as J1 (summer work travel), the Optional Practical Training (OPT, which allows international students to stay in the US after graduating), and the E2 program (an investor visa). Also going under the presidential knife is the L1 visa, which allows a foreign worker to transfer from an office abroad to the same company’s US branch. Now, an applicant will be subjected… Read more »
broadcreek48
Member

Perceptive and persuasive analysis.

Spacie
Member

Anecdotally, I have friends in Europe rethinking plans for travel to the US. Some were interested in combining vacationing with scoping out opportunities for post-graduate employment, but with chatter of “America first” work visa policies, they are saying “Why bother”?

Anyone observing the numbers involved in marches counter to Trump and Trump-like policies outside of the US should at least raise the question if Trumps policies or even perceptions of those policies could negatively impact the US travel industry. Am looking forward to further analysis.

David SF eastbay
Member

I think the more heavily traveled summer season will give a better picture of how things will really be effected.

Dana
Guest

We should never place economics before security.

While the roll out of restrictions was certainly clumsy, ultimately if placing additional levels of immigration controls has a national security benefit so be it.

Liberal border controls for sake of profits is simply wrong, and not something that should ever be part of the government’s equation.

Harrold
Guest

If security was the reason behind the Muslim ban, Saudi Arabia would have been #1 on the list followed by the entire Bin Ladin family.

Haolenate
Guest

Except Saudi Arabia has a huge infrastructure of information on its citizens. Syria, Yemen not so much.

Frankly
Guest

Except President Trump has many business dealings with Saudi Arabia is what you mean.

Oliver
Guest

How about Tunesia. Xmas truck attacker in Berlin was Tunesian. How about Afghanistan? How good are their information systems?

Biggles
Guest

How many Americans were killed in the US last year by citizens of the seven countries?

How many Americans were killed in the US last year by US citizens?

Maybe an export rather than import ban might be appropriate?

jboekhoud
Member

LOL. Good point. Try getting those heavily-armed teenagers in trenchcoats on a plane though!

Oliver
Guest

Or rather, the rest of the world should introduce background checks. Want to drive to Canada and own a gun (not have a gun with you)? Sorry, too dangerous. The FBI will certainly assist with gun registration records, right?

Jim
Guest

I see you have been drinking the “anything for national security” Kool Aid.

Arbitrarily denying entry to people who already obtained visas, some of which have been living in the US for years, does nothing for natural security. It’s just fear-mongering.

James
Guest

Wait till the next shoe drops.

The Visa Waiver/ESTA programs are a big weakness.

During Obama administration, there was growing concern about these programs and fact that many folks holding ‘friendly’ passports yet radicalized can enter the US without much scrutiny creating a very dangerous loophole.

cahilldot
Member

it’s winter EU bookings go down till may???do not blame it on President Trump…please;

DOTTI

Eric
Guest

You probably could put a little picture of shirtless Vlad next to the 15.8% increase for Eastern Europe.

jaybru
Member

I think travel is going to take a “huge” hit in the next few years. Not just international travel, ever our own, domestic. It seems just about everyone is spooked about something, whether the foreigners we know, the ones we aren’t sure of, and those crazy (they didn’t my way) fellow passengers…and our beloved flight crews!

AJ
Member

I would expect here in Australia we’ll see an uptick in visitors from China and other Asia-Pacific countries, who may have been looking to travel to the US and have changed plans for whatever reason.

I’ll avoid all the rhetoric flying around the current administration but the underlying conversation here has been, “let’s take advantage of the US becoming more insular.” There’s serious economic benefits to doing so in a range of industries, not least travel.

Peter B
Guest

Lets not lose sight of fact that entry to any nation is not a right, but a privilege.

The US along with any nation is fully within their rights to place any immigration restrictions or border controls they deem appropriate regardless of popular opinion.

I would very much rather err on the side of caution and have the government clamp down on entry requirements than look the other way due fear of upsetting the economics of the travel industry.

Jim
Guest

There was no “caution” involved here. If Trump had been at all concerned with national security, he would have placed restrictions on the countries that actually have a history of producing terrorists.

This was nothing more than an attempt to pander to Christian evangelicals by making it look like the government is getting tough on Muslims.

Frankly
Guest

Ireland has produced a lot of terrorist over the years.

Marks
Guest

And Spain (ETA), and the former Yugoslavia.

cahilldot
Member

not true get ur facts from other than cnn,msnbs,cbs etc!!!!

DOTTI

Oliver
Guest

Apparently so far the courts in the US are not convinced that these restrictions are lawful.

Jim
Guest

Yes, but the damage is done.

cahilldot
Member

i agree Peter!!!!

DOTTI

Thompson
Guest

I agree that things like ESTA and Visa Waiver Program are huge loopholes just waiting to be exploited.

Obama admin was too afraid to upset the status quo, but I can very much see these programs either get tossed out entirely or reworked significantly.

MK03
Guest

Problem is that would make it harder for those who legitimately want to go to the US for legitimate purposes. My country has a lot of immigrants living in the US and many are fearing for their lives because of increasing immigration restrictions (ironically, apparently a large percentage of them supported Trump).

Oliver
Guest
Victor
Guest

Enormous concern?

What should be of enormous concern is US national security first and foremost, not worrying about the plight of foreign parties, or specific industries.

I have no issues barring visitors from failed states, or nations hostile to the US that cannot or will not share intelligence with the US regarding their citizens.

Sam
Guest
While security does come first it is clear to the rest of the world and anyone with common sense that this ban was intended to single out a group of people for their religion. If you don’t see it that way you are naive or have short-term memory loss and missed everything Trump and his ilk said on the campaign trail. I am a physician and there are THOUSANDS of doctors from overseas training and working in our country (including people from those 7 countries). This has directly impacted people in the healthcare system for no good reason. I am… Read more »
Jim
Guest

Ironically, this executive order is only going to hurt national security, by giving the terrorists a great recruiting tool.

Zero actual terrorists were impacted by the order, but it sent a message throughout the world that America is an irrational, racist country. ISIS will definitely be using that to their advantage.

Scott
Member

I’m amazed that Americans only think this “might” be an issue. It’s already an issue, things are already getting cancelled. I offer up “Agile Testing Days” which a friend of mine was set to attend (and speak at). Cancelled, due to political uncertainty in the US. https://agiletestingdays.us/

One of our heads of software development was to travel to the US for a corporate meeting, however, he holds dual Iranian/Canadian citizenship, and had been advised to not even attempt it.

cahilldot
Member

what a bunch of crap???if u have the proper papers there is no problem!

DOTTI

Scott
Member

Your comment is far from the truth unfortunately. The US CBP have been refusing people WITH the correct paperwork, if they also have dual citizenship to a banned country. Heck, the US has even denied overflight on Canada-Europe flights to citizens of one the 7 banned countries.

From a global perspective, the US is a complete crapshoot right now, and that’s why business is very very cautious.

Tim Dunn
Member

Perhaps one of the most definitive responses to the question about travel comes from United Airlines in their investor presentation filed with the SEC just yesterday

“Monitoring impact of travel ban but no material impact to date”
“Strong US point of sale demand helping offset international point of sale declines”
page 6 under Atlantic here
http://ir.united.com/~/media/Files/U/United-Continental-IR/events-and-presentations/presentations/2017/stifel-presentation-2017.pdf

Marks
Guest
I think that’s fair enough. Also, where the US is now is a redult of the Democratic process. Most electors in the US should have been aware of what Trump was going to do. So, sure, there’s going to be some changes. Voter turnout was pretty low, so those who didn’t like what Trump was going to do should have gone out to vote, and/or campaigned against him. I didn’t see travel agents and airlines expressing any concerns during the campaign, so presumably they thought it would not matter that much. No point complaining after the election, and as your… Read more »
W Scott Moyer
Member

?Oliver –Is that the only link you have –from 2015? This is not what is happening today. Try looking at 2017 news.

LT_DT
Guest

Another anecdotal data point – we live in a part of the US with a significant number of expats. During the summer, their families and friends from overseas often come to visit. Over the last few weeks, there’s been quite a bit of discussion amongst our friends that many of those trips won’t happen this year because of the uncertainty surrounding visa/entry policies and regulations, not to mention the current political climate.

Marion
Guest

An American living in France, I was planning a fall trip to New England with a French friend. The day after the election she called up and said “how about we do Quebec instead?” Since I had never been to Quebec either, that’s what we’ll do. Multiply that and you get a 13% decline in reservations from Western Europe by people who are not (yet) affected by Trump’s ban. This has come during the prime period for getting transatlantic tickets for the summer.

Adrian in NZ
Guest
For those of you saying the ESTA/Visa Waiver Provisions should be changed, why would you block perfectly innocent, friendly tourists from holidaying and spending money in the US? There are many of us in countries approved for ESTA/Visa Waiver Provisions who are zero threat to the United States. We have no Islamic ties at all. Why make it harder for us? Getting a regular US visa is a pain in the rear end. The ESTA is one step towards making it slightly more amenable. The US already has one of the tightest immigration regimes in the world. I know of… Read more »
Tim Dunn
Member
There are many countries that fingerprint foreigners.. In some cases it is directed at Americans based on reciprocity but that isn’t always the case. I agree that ESTA works and shouldn’t be changed – and there is no reason for it to be changed. In all of this discussion, lots of people forget that every country has the sovereign right to control what and who flows in and out of its borders. Trump is making a lot of noise but there have been tightening border controls in many parts of the world for years. France is at a far higher… Read more »
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