A new type of Bubble

Travel Bubbles

We have all heard of ‘financial bubbles’. Every decade or so Wall Street produces one that eats up our investments.  Students of history will recall the Tulip Bubble of 17th century Holland and the South Sea bubble a hundred years later in England, both of which led to speculative frenzies followed by financial collapse. Our modern economies seem to favor Real Estate bubbles; this writer saw a huge one first-hand in the Gulf.

But what on earth is a ‘travel bubble’?

Post-COVID trends

The travel industry has been one of the biggest losers in the pandemic – other than the hundreds of thousands who lost their lives, of course.

The last few decades saw an exponential growth in non-essential travel. People got used to gadding off to the far regions of the world on a whim. Clever marketing and rising disposal incomes fueled the the spread of mass tourism all over the globe. While it boosted economies, it also did untold damage to the environment and old cultures. The hordes of tourists descending from their buses and spending a few ‘Instagram worthy’ moments at famous attractions before moving onto the next, became synonymous with the evil of mass tourism. The proliferation of mass-market global brands that displaced indigenous ones, is one of the many tragedies that resulted from this globalization.

Now, with the trillion-dollar travel industry in the doldrums, there is panic among the stakeholders. Unless people start traveling again soon, the airline and hospitality industries may never recover from the pandemic. The entire sector is frantically trying to find a way to enable some recovery soon.

The COVID variation

As we know, the virus appears to behave differently in varying locations. The reasons for this have baffled scientists – it could well be that insufficient time has passed for us to spot the true trends.

However, some countries have evidently coped with the pandemic far better than others. A standout has been New Zealand, with only a small number of deaths and no new infections for several weeks. The natural isolation of the island nation, implementation of an early (and very strict) lockdown, an excellent health care system plus a charismatic and trusted leader have all led to the effective elimination of the virus in that country.

In fact, the entire Pacific/Oceanic region has been a shining example. Many of the smaller island nations such as Polynesia, Fiji and Papua have had no deaths at all, thanks to early isolation and small populations.

Australia too has coped reasonably well, with most states recording no deaths. The two big cities of Melbourne and Sydney have had most of the cases with country Australia being largely spared. Even the situation in the major cities appears to be well under control.

Country Population Infections Deaths Tests per million
Australia 24.5 million 6,900 97 34,429
New Zealand 4.9 million 1,500 21 40,870
Polynesia 276,000 60 10,829
Fiji 926,000 18 1,450
New Caledonia 278,500 18 19,103
Papua New Guinea 8.6 million 8 268
Table 1 – data from worldometers.info/coronavirus

In addition to the lock-downs, the large number of tests conducted (see Table 1) has allowed the governments of Australia and New Zealand to isolate, trace and treat infected individuals. This has led to the effective containment of the pandemic in Australia and elimination in New Zealand.

A Trans-Tasman Bubble

Both countries are now emerging from their lock-downs, with normal life slowly resuming from this week. Their respective Prime Ministers have agreed in principle to allow travel between the neighbors, who are separated by the Tasman Sea, in coming weeks. The two nations share many links, including the statistic that the largest number of visiting tourists in each country is from the other nation.

It is quite likely that, should there be no surge in cases, this ‘bubble’ will be expanded to include some of the smaller island nations as well. With the Southern hemisphere’s winter approaching, New Zealand’s ski fields and the pristine beaches of the Pacific islands are guaranteed to be popular destinations for residents who have been largely confined to their homes for the past several weeks.

A Baltic bubble?

Also discussing a similar easing of restrictions are the three Baltic states of Estonia, Latvia and Lithuania. These three nations, which also have a great deal in common, emerged from the detritus of the Soviet Union and have strong economies. It is possible that they too could form another travel bubble as early as May 15th. Provided it is successful, it could grow to include some of the nearby Scandinavian states that have dealt with the pandemic quite effectively as well.

Country Population Infections Deaths Tests per million
Estonia 1.3 m 1,700 61 48,981
Latvia 1.9 m 950 18 41,908
Lithuania 2.9 m 1,500 50 70,671
Denmark 5.7 m 10,600 527 57,700
Finland 5.6 m 6,000 225 22,800
Norway 5.5 m 8,200 228 37,900
Sweden 10.1 m 27,200 3,300 17,600
Table 2 – data from worldometers.info/coronavirus

Testing, tracing and isolation have been the bedrock of handling this pandemic well. Sweden is the outlier in all these countries, as it never went into lock-down. The high number of deaths there in comparison to its neighbors shows the human cost of attempting the strategy adopted by the Swedish government.

What of Asia?

Asia on the whole has fared reasonably well (so far) in the COVID trauma, despite being among the first places infected by travelers from Wuhan. South Korea and Taiwan in particular have contained the virus well, despite not entering lock-down. The fact they are both essentially islands (South Korea’s border with the northern part of the peninsula is sealed) and relatively simple to isolate.

Vietnam has an astonishingly low infection rate and not a single death, despite sharing a long land border with China. Hong Kong and Singapore too have coped relatively well. There is a possibility that some or all these nations could form a regional travel bubble too. Business people going between China and South Korea already have a new ‘fast track’ entry channel that avoids some of the onerous testing requirements imposed by their respective governments.

Can there be an Indian Ocean bubble?

The island nations of the Indian Ocean – Sri Lanka, Maldives, Singapore and (perhaps) the Seychelles – have the geographic possibility of forming a similar travel ecosphere. Their relative isolation and the ease of controlling access make it an intriguing possibility. However, the reality is that the infection and testing rates of these nations differ sharply.

Country Population Infections Deaths Tests per million
Maldives 392,000 904 3 21,800
Singapore 5.6 m 24,671 21 38,300
Seychelles 95,800 11
Sri Lanka 21.6 m 915 9 1,800
Table 3 – data from worldometers.info/coronavirus correct as of 15/05/2020

Only Singapore and the Maldives have testing regimes anywhere close to recognized norms. Without a statistical basis for opening the borders, even in a selective fashion, it is unlikely that an Indian Ocean travel bubble is a realistic possibility.

Fear of infection and the spread of the virus are the twin threats that every country wishes to guard against. Only a stringent regime of testing and transparent data-sets can assure others that each individual country is controlling the pandemic. Countries will need to harmonize their protocols of data gathering, testing and managing the pandemic before a travel bubble is truly successful. This could prove to be as vexing as negotiating a trade agreement.

The governments of Australia, New Zealand and Singapore have set the standard for open communication, widespread testing and containment of the pandemic. Other nations would do well to follow suit.

 

Comments may be sent direct to hello@surenratwatte.com. This and other writings are available on the author’s blog https://surenratwatte.com/blog/ and you can follow him on Twitter @SurenRatwatte

 

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