Asia-Pacific airlines cautiously optimistic as regional traffic improves

(PHOTO: AAPA) airline leaders gathered at the Association of Asia Pacific Airlines (AAPA) 66th Assembly of Presidents in Bangkok last week welcomed the resumption of international air travel, which has surged as the region’s governments gradually removed border restrictions imposed since 2020.

Sydney Airport earlier during the pandemic. (PHOTO: Shutterstock)

As cross-border travel was progressively restored, regional carriers have raced to put on flights to meet runaway demand, stimulated by the pent-up desire to travel and savings accumulated in the two years of isolation. During the first nine months of 2022, Asia-Pacific airlines recorded a robust increase in the number of international passengers carried by more than five-fold to 62 million compared to the same period in 2021. Consequently, with capacity expanding by 125 percent over the same period, the international passenger load factor jumped by 40 percentage points to average 70 percent.

By contrast air cargo markets, often an indicator of the state of the global economy, saw demand as measured in international freight tonne kilometres (FTK) fall by 4.4 percent during the first nine months of 2022 as export orders waned and supply chain problems mounted. The macro-economic outlook has weakened, with rising inflation rates in many countries, stubbornly high energy prices and a strengthening US dollar. Nevertheless, prospects for the region’s airlines remain promising as long as pent-up demand continues to hold up and cargo yields remain healthy despite the easing of demand.

Subhas Menon. (PHOTO: AAPA)

Reflecting the sentiment at the assembly, Subhas Menon, director general AAPA, said: “The region’s recovery still lags behind the rest of the world and is expected to reach only 75 percent of 2019 levels by year-end. Except for mainland China, the gradual re-opening of borders in many economies in Asia and strong recovery in air services only serve to underscore the magnitude of pent-up travel demand.”

Apart from consolidating the lessons learned from managing the pandemic, the industry is also bracing to navigate the multiple headwinds that appear ahead as a result of a moderation in the outlook for the global economy. Overall, airline margins remain under pressure.

Noting that the pandemic brought regional air transport to a complete standstill for two years, Menon added: “As air travel gradually recovers, the airline industry is taking extra care to maintain its outstanding safety record. Airlines continue to actively invest in recruitment and training to address additional manpower needs as air travel demand is expected see healthy growth in the coming year.”

Cambodia was among one of the first countries to do away with quarantines and other COVID-related requirements in order to restart its tourism economy. (PHOTO: Matt Driskill)

At the same time, airlines remain firmly committed to their sustainability goals. AAPA welcomed the commitments and resolutions passed by member states at the ICAO Assembly in October, particularly in relation to the adoption of a long-term aspirational goal of net zero carbon emissions by 2050 and the commitment to the Carbon Offsetting and Reduction Scheme in Aviation (CORSIA) as the only market-based offsetting scheme for international aviation. Underlining the significance of the resolutions, Menon said that, “Government support in the form of policy, investment and subsidies, particularly for sustainable aviation fuels and CORSIA, will be key to the industry achieving its goal of net zero emissions by 2050. All stakeholders, including fuel suppliers, whose investment and commitment to support the energy transition, will need to work closely together in order to achieve this ambitious goal. The general outlook for air travel in Asia-Pacific in 2023 remains positive. However, there are some significant downside risks. The business environment for airlines is challenging and ongoing geo-political tensions could undermine recovery. Despite the softening of the global economic outlook, Asia Pacific airlines are well-placed to see traffic volumes recover closer to pre-pandemic levels if demand continues to stay strong.”

AAPA passes resolutions on safety, coordination, and sustainability
The AAPA also used the assembly to pass a number of resolutions dealing with various aspects of the industry. The resolutions included:

  • Passenger Facilitation: While many governments introduced digital applications (apps) to process contactless pre-travel verification of health status, many of these apps were neither interoperable with each other, nor enabled for other purposes, such as for immigration clearance or check-in, resulting in confusion for travellers. Existing e-passport technology can be leveraged for digital travel credentials and pre-verification of traveller identity for seamless immigration clearance. This would also help alleviate the congestion at many airports due to manpower constraints, as well as queues at immigration checkpoints. AAPA calls on governments and border control agencies to work together in the adoption of interoperable digital applications for air travel, in accordance with ICAO guidance, so as to reduce unnecessary pre-departure congestion, delays and inconvenience to the travelling public. AAPA also calls on governments to use existing passenger data exchange systems to provide integrated pre-travel verification responses to aircraft operators related to immigration, security and public health requirements, while fully respecting passenger privacy rights.
  • Safety: Another area of serious concern for AAPA airlines are unilateral regulations introduced by national/regional aviation regulators, failing to take into account the international nature of airline operations. In the current instance, the US Federal Aviation Administration (FAA) now requires that all commercial aircraft be retrofitted with new or modified radio altimeters by July 2023 to maintain their operations to the US, in order for telecommunications companies to power up their 5G networks to the full capacity authorised by the Federal Communications Commission, even as the full effects of 5G on aircraft operations are being studied.  Unresolved spectrum issues relating to aeronautical safety services have resulted in flight cancellations, degradations of air traffic management services and interruptions of flight operation. A comprehensive frequency spectrum strategy in line with ICAO Standards and Recommended Principles (SARPs) is required to support timely availability and protection of adequate spectrum for civil aviation. AAPA believes that introducing regulations to meet specific regional or sectoral goals that are counterproductive to aviation safety and recovery, is not in keeping with ICAO’s “no country left behind” principle. AAPA calls on governments, aviation regulators, safety agencies and other stakeholders to support the ICAO frequency spectrum strategy. AAPA also calls on governments to consult with aviation safety regulators, subject matter experts and airspace users, to provide all necessary considerations and to establish regulatory measures to ensure that incumbent aviation systems and services are free from harmful interference.
  • Sustainability: AAPA member carriers are fully committed to achieving the ambitious industry target of net zero carbon emissions by 2050. The 41st ICAO Assembly resolved to, amongst others, work together to strive to achieve a collective long-term global aspirational goal for international aviation (LTAG) of net-zero carbon emissions by 2050, in support of the UN Paris Agreement’s goals, recognising each State’s special circumstances and respective capabilities. The ICAO Assembly further called on Member States to set a coordinated approach in national administrations for policy actions and investment to accelerate the appropriate research, development, deployment and use of cleaner and renewable energy sources for aviation, including the use of Sustainable Aviation Fuel (SAF) and Lower Carbon Aviation Fuel (LCAF). Achieving the above objectives will require global government support and incentives to ensure that sufficient investment is made by all stakeholders, including fuel suppliers, in infrastructure and frameworks that will provide sufficient quantities of SAF at affordable cost to meet the long term needs of the airline industry. AAPA calls on governments to work with relevant stakeholders such as fuel suppliers to accelerate the fuel research, certification and development as well as processing technology and feedstock production, and the certification of new aircraft and engines to allow the scaling-up of SAF in sufficient quantities at competitive cost to meet the long term needs of the industry. The Association also renews the call on governments to participate in the CORSIA scheme, to respect the scope and the integrity of CORSIA and refrain from applying duplicative requirements on international aviation CO2 emissions.

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