Ukraine Conflict: Southeast Asia now stares at a long road to recovery

Pryagraj, India, 2022-Mar-28 — /EPR Network/ — Travel industry insiders are concerned that the crisis in Ukraine may jeopardize the much-anticipated revival of Southeast Asia’s tourism-dependent economy. COVID-19 travel restrictions are finally being eased across the region. However, experts suggest that the road to recovery is full of hiccups, with the Ukrainian crisis likely to play spoilsport. The Philippines, Laos, Cambodia, and Thailand accept vaccinated visitors with costly and time-consuming measures. Indonesia recently declared that quarantine-free travel to Bali would resume on March 14, while Vietnam aims to reopen to visitors on March 15. World Tourism Organization (UNWTO) Panel of Experts study claims that over two-thirds of travel experts expect their fortunes to improve this year due to lowering border restrictions and favorable statistics from 2021.

According to the UNWTO, global tourist earnings for 2021 were $1.9 trillion, a 19% increase over the previous year. The International Air Transport Association findings reveal that overall worldwide passenger traffic increased by 8%, with demand down 58% compared to 2019 – albeit Asia Pacific’s recovery trailed behind other areas.

However, the Ukraine conflict, Russian sanctions, and airspace restrictions have tempered expectations in a region where Russians displaced Chinese who could not travel due to their country’s strict border controls as the largest and most spendthrift group of visitors to many top destinations during the pandemic.

The repercussions are already being felt in prominent tourist locations such as Phuket, Thailand, where Russians account for 51,000 of the 278,000 foreign visitors. According to the records of the Tourism Authority of Thailand, the latter visited the island in the last four months. “We have spoken to numerous hoteliers who are reporting a lot of cancellations due to reduced air traffic,” Bill Barnett, head of C9 Hotelworks, a Phuket-based consultant, told reporters.
Since the drop in Chinese tourists, Russian travelers have become a key market for places such as Thailand, Vietnam, and Indonesia’s Bali, according to Gary Bowerman, a travel expert based in Kuala Lumpur. “For certain, the conflict will have an impact on those nations-openings,” he added.

Statistics Indonesia reveal that Russia swiftly surpassed Australia as the most significant source of visitors in Bali when Canberra restricted its people overseas, with 68,000 Russian nationals flying to the island in 2020. Russians’ spending on food, lodging, transportation, and excursions has given critical economic stimulation for the island, where tourism accounted for 60% of GDP before the outbreak. However, as the rouble’s value falls to historic lows, the number of Russians who can afford to travel abroad is expected to decline. It’s conceivable that just getting there will be difficult.

One of the few airlines that offered regular foreign flights to Bali last month, Singapore Carriers, said that its service between Changi Airport and Moscow would remain suspended indefinitely. “Back home, everything is a shambles. Prices are soaring, people are losing jobs, and the bandwidth for withdrawing money is narrowing,” said Jaleel Mubarak, a Russian IT expert working in Bali who is ready to travel home to be with his children. “Leaving Russia will become extremely difficult very soon, and I believe Indonesia will also go in line with the Western world with sanctions,” Mubarak added, referring to Indonesian President Joko Widodo’s comment that Russia’s invasion of Ukraine was “unacceptable.”

As a result of the crisis, tourists from Russia and Ukraine will not be alone in encountering additional hurdles when traveling to Southeast Asia. Russia contributes for over 10% of the world’s crude oil supply, and markets are prepared for significant disruptions due to sanctions and possible retaliation by Moscow. On Wednesday, the global benchmark reached $115 a barrel, only days after breaking through the crucial $100 mark since 2014.

“Incidentally, oil is now more than $100 a barrel, and if it stays there or rises further, jet fuel prices would explode,” said Richards, an analyst based in Bangkok. “Normally, after a break like COVID, airlines would add more routes and decrease fares to recapture market share. However, the cost of aircraft fuel will make discounts impractical,” he believes. According to him, airlines may face fuel supply issues. “Long-haul airlines will try to find it,” he added. There is a significant danger of lowering global demand for aircraft travel. The exclusion of Russian planes from the airspace above the United States, European Union, United Kingdom, and Canada and Russia’s retaliatory bans adds to the list. Circumnavigating Russia, the world’s largest country and a connecting point between Europe and Asia may add hours to some routes. Every extra hour of flight time adds between $11,000 and $20,000 to the cost of a trip,” said John Gradek, an aviation management specialist at McGill University, during an open online debate.

Flights between Europe and East Asia will be the most affected immediately. Flights to popular locations such as Tokyo, Seoul, Shanghai, and London have already been canceled or rerouted by Finnair and JAL. On the other hand, the bans create another speed bump in the path of recovery for Southeast Asia’s tourism-dependent economies. “People aren’t going to say we won’t visit abroad because Europe is at war,” said Ruchi Mathur, a travel consultant based in India. “The actual financial impact of the fight on oil prices and inflation has yet to be determined. Suppose the European market collapses and China fails to rebound. In that case, it will be bad news for a market that is already volatile,” she asserted before signing off.

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