Author: Faizal Yahya, NUS
With the global aviation market still recovering from the COVID-19 pandemic, the Asia Pacific region has gone from a world leader in aviation growth to a laggard. Airports Council International (ACI) data indicates that air passenger traffic in the Asia Pacific region experienced a 62.7 per cent reduction from 2019 to 2021. In comparison, the total world passenger traffic decreased by only 48.3 per cent.
When it comes to freight aviation, the Asia Pacific region’s recovery also lags behind the rest of the world, albeit less dramatically. Air freight traffic increased by 1.5 per cent in the Asia Pacific region across the same period compared to a 2.9 per cent increase in global air freight. Continued COVID-19 lockdowns in China have maintained pressure on the region’s role in global supply chains.
The air transport sector accounts for US$944 billion of the Asia Pacific’s GDP, with the region accounting for more than 50 per cent of the 87.7 million workers employed in the industry globally. In 2022, ACI data estimates that airports in the APAC region will incur losses of around US$27 billion.
The slow recovery of Asia Pacific aviation is worrying given that the region is a growth area for air travel. According to projections from Airbus and Boeing, average global growth for air travel is predicted to sit at 4 per cent, while air travel in the Asia Pacific region is expected to grow by an average of 6.5 per cent. Some Asian airlines deferred new aircraft deliveries and returned planes to lessors during the pandemic, raising concerns about a serious decline in the region’s aviation market.
According to the Association of Asia Pacific Airlines (AAPA), in February 2022, the region’s airlines carried 2.5 million international passengers, or approximately 8.4 per cent of the 30.3 million recorded passengers in the same month of 2019. The international passenger load factor (PLF) averaged 41.7 per cent, while available seat capacity was 19.2 per cent of pre-pandemic levels. International air traffic in the Asia Pacific region is at 6 per cent of pre-pandemic levels compared to an average of 40 per cent in other regions.
The recovery of the Asia Pacific region’s international traffic is dependent upon large tourism markets such as China and India. At the end of March 2022, India restarted international flights but China is continuing to keep its border closed to international travellers. In 2021, while adhering to a zero-COVID policy even China’s domestic passenger traffic fell to 24.4 per cent of 2019 levels.
Global trends indicate that as vaccination levels reach 70 per cent, this would be the tipping point for nations to open the borders to greater air travel. But this is not true for Southeast Asia and the Southwest Pacific either. Australia, Cambodia, Laos and New Zealand kept their borders closed for longer than many other nations. Indonesia, Malaysia, Singapore and Vietnam have also not seen significant increases in international passenger aviation capacity despite relatively high rates of vaccination.
Countries such as Singapore tried various initiatives such as travel bubbles and green lanes to no avail. At the end of 2021, Singapore initiated the vaccinated travel lanes initiative, which had some success in promoting tourism by waiving quarantine requirements for some vaccinated travellers. But even this initiative was challenged by the Omicron wave and eventually pared back.
In the first quarter of 2022 there were signs of a rebound in the Asia Pacific region. Singapore, Thailand, the Philippines, Vietnam and Australia reopened to more vaccinated tourists without quarantine. Singapore has expanded its vaccinated travel lanes to include passengers from Qatar, Saudi Arabia and the United Arab Emirates without quarantine. Indonesia is also lifting all quarantine requirements for international travellers after successfully trialled quarantine-free travel to Bali, Batam and Bintan islands.
Low cost carriers will likely recover faster than full service carriers across 2022 as domestic and international borders open up. This may come as an advantage to the Asia Pacific region’s aviation carriers. In the Southeast Asian region, the penetration rate of low cost carriers is as high as 56.2 per cent.
The return of international air travel in the Asia Pacific region will also depend on a number of policy measures. Internationally, digitalisation could assist in streamlining multi-layered travel requirements. For example, the IATA Air Travel Pass, which includes key information such as vaccination status, could be made mandatory. An effective contact tracing system for all travellers would assist in kickstarting international travel, as would a digital system that interfaces smoothly with airlines, international airports, border control authorities and public health systems.
The outlook for international air travel looks somewhat more positive now that nearly all countries in the Asia Pacific region have adopted a more pragmatic approach to living with the COVID-19 virus. Continuation of virus containment would cause more harm to economies, delay recovery and risk higher levels of business closure and unemployment.
International air travel in the Asia Pacific is showing signs of recovery, but the slow pace of this recovery suggests an urgent need for policy measures to revitalise the aviation industry. Countries should focus on facilitating measures to enable convenient and safe international travel to ensure continued aviation growth in the region.
Dr Faizal Bin Yahya is Senior Research Fellow at the Institute of Policy Studies, Lee Kuan Yew School of Public Policy, National University of Singapore.