The Omicron coronavirus variant is the latest obstacle for airports globally with renewed travel restrictions but it is too early to say if Omicron will be a significant disruptor to international air traffic, Fitch Ratings said.
Fitch said that testing requirements have become more stringent, which could dampen the recovery prospects of airports that rely on international travel. A material slowdown in air travel would maintain pressure on global airport revenues and credit quality.
The US airports are expected to remain resilient due to the strong domestic travel market. The US market is largely based on domestic travel, and air traffic continues to improve, reaching 84% of 2019 levels in November 2021.
Many airports reached 90% or more of 2019 levels in recent months. Border closures with certain countries would only affect certain US international gateways and only to a limited extent. Most of the largest international gateways have only 30% international travel and are diversified in markets served, said Fitch.
While the risk of a synchronized lockdown in EMEA seems remote for now, this is certainly a downside risk to the fragile short-term EMEA sector outlook, which heavily relies on leisure and international short haul traffic.
According to Fitch, “It is too early to say whether Omicron warrants a revision of our base case traffic forecast for EMEA. Long-term travel forecasts, which anticipate recovery of 2019 levels by 2025, likely will not be affected, but our short-term forecast may change if a seasonal coronavirus surge drags on air travel growth.” It further opined, “We do not expect Omicron to affect the sizable domestic travel market in APAC. International borders have started to open but this could be reversed or delayed should Omicron become widespread. No lockdowns are anticipated in Australia but China’s stringent international travel restrictions remain in place. A setback in international travel, a significant market for Latin American (LatAm) airports, would prolong an already slow recovery for airports in the region. Airports with smaller levels of business travel and a higher proportion of domestic passengers are better positioned and expected to recover more quickly, as domestic travel is recovering faster than expected and should reach 2019 levels in 2022 in some countries. In its rating cases, Fitch assumes an overall recovery of around 80% of 2019 passenger volume in 2022 for most rated LatAm airports, with a full recovery achieved in 2023 or 2024. While there are new restrictions, such as quarantine measures in Brazil for non-vaccinated passengers, it is too soon to incorporate the effects of Omicron in our traffic expectations.