Impact of Required U.S COVID Testing on International Travel Demand

Beginning Jan. 26, all travelers boarding flights to the U.S. will be required to show proof of a recent, negative COVID-19 test to enter the country. How are the new requirements impacting travel demand?

Adit Damodaran - Jan. 26, 2021

Summary:

Impact on International Travel Demand Overall:

  • Since January 16th, overall search demand for international flights fell 4%.

  • This is not a seasonal trend. As we saw in January 2020, international search demand typically picks up around mid-January and rises into February. Last year, overall search demand for international flights rose 8% in this interval.

  • This indicates a net 12% decrease in overall international search demand for January 16th-24th, 2021, relative to the same period last year. 

  • Overall international airfare prices have steadily increased, but vary more at the regional level. 

Impact on Mexico, Latin America and Caribbean Travel Demand:

  • Since January 16th, search demand to Mexico, Latin America, and the Caribbean has fallen an average of 10%.

  • This trend is not seasonal, we typically see increased demand for these regions heading into February, at an average increase of ~23% between Jan. 16th and Jan. 24th.

  • This thus marks a net 33% decrease in search demand when compared to the same period last year. 

Impact on International Demand

Amid the announcement of new testing requirements for U.S. entry in the second week of January, we have seen decreasing search volume for international travel. 

Search volume for international flights in January 2021 was about 30% of January 2020 levels, but trended closer to 25% of last year’s levels between January 16th and January 24th. Since the 16th, overall search demand for international flights fell 4%. This is not a seasonal trend. As we saw in January 2020, international search demand typically picks up around mid-January and rises into February. Last year, overall search demand for international flights rose 8% in this interval. This indicates a net 12% decrease in overall international search demand for January 16th-24th, 2021, relative to the same period last year. 

International Flight Searches from the U.S
Figure 1: Standardized search volume for all international flights, comparing Jan. 2021 to Jan. 2020

Figure 1: Standardized search volume for the Caribbean, Latin America, and Mexico since January 1, 2021.

Travelers headed abroad will now need to plan ahead to get tested at their destination prior to their return. The added logistical complexity appears to have dampened international travel demand from the U.S. 

Overall international airfare has continued on a gradual rise in January, even amid lower international travel demand. 

Demand to Mexico, Latin America & The Caribbean

We’ve seen declines in search volume for flights to Mexico, Latin America, and the Caribbean following the announcement of new testing requirements for U.S. entry in the second week of January. Since the 16th, search demand for international flights fell 12%, 10%, and 10% for Mexico, Latin America, and the Caribbean respectively (an average of a ~10% decrease across all three regions). 

US Search Demand
Standardized search volume for the Caribbean, Latin America, and Mexico since January 1, 2021.

Figure 1: Standardized search volume for the Caribbean, Latin America, and Mexico since January 1, 2021.

Travelers headed abroad will now need to plan ahead to get tested at their destination prior to their return. The added logistical complexity appears to have dampened international travel demand from the U.S. for these regions.

This trend is not seasonal, we typically see increased demand for these regions heading into February, at an average of ~23%.

In 2020, these regions saw increased search demand heading into February. From the period of January 16th, 2020 to January 24th, 2020, search demand to Mexico, Latin America, and the Caribbean increased 32%, 7%, and 29% respectively (an average of a ~23% increase across all three regions). 

US Search Demand to Mexico Latam Carribean (YoY)
Standardized search volume for the Caribbean, Latin America, and Mexico in Jan. 2021 compared to Jan. 2020

Figure 2: Standardized search volume for the Caribbean, Latin America, and Mexico in Jan. 2021 compared to Jan. 2020

This thus marks a net 33% decrease in search demand, when compared to the same period last year. 

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