VIEWPOINT: APAC’s path to recovery and growth

(PHOTO: Shutterstock)

Javed Malik

The road to recovery for the Asian travel market has been a challenging one, with many obstacles to overcome. the APAC travel sector was still lagging behind North America and Europe through late 2022 and early into 2023.

But with China now identifying 20+ markets to allow travel groups to commence movement, the giant is once again waking up from its extended nap. There is a real buzz of excitement and anticipation for delivering new experiences across the region. Finally, the plans made through early 2022 can start to bear fruit through Q3 and Q4 of 2023 and gain strong momentum in early 2024.

Recovery Path and Local Demand
The Asian travel industry both in the domestic and inter-regional markets, such as ASEAN, has done well across Hospitality and Tourism related activities. Whilst China accounts for up to 60 percent of all tourists in some Asia Pacific countries, the recently announced relaxed restrictions on group travels will certainly be very welcomed. There is still some work to be done by China in truly releasing their sleeping giant at scale, but they are finally moving forward.

Chinese travellers have significant pent-up demand for overseas travel experiences again, once the majority of restrictions are lifted, Asia Pacific will be the first to benefit from those significant volumes across all groups, as well as some parts of Europe, expect the nap to end by Q3 of 2023.

Despite the “China effect”, there have been some encouraging signs of recovery. The summer of 2022 saw European tourists returning to the region, as well as Australians and New Zealanders finally able to travel to Bali after enduring stricter lockdowns Additionally, the FIFA World Cup in Qatar attracted solid regional numbers, with travellers from North America, South America, and Australasia hopping over to Asia Pacific as an extension to their journey to Qatar.

Slow Supply Chain and Skilled Manpower Shortages
The slow supply chain and skilled manpower shortages are two interrelated challenges that are affecting the travel industry’s recovery efforts. The pandemic-induced disruptions in global supply chains have led to significant delays in the delivery of aircraft spare parts and other essential components, resulting in up to nine months of lagging timelines. Whilst we see this starting to improve in Q1 of 2023, the lag effect still impacts the region. This issue hinders the ability of airlines to maintain their fleets’ performance levels, and they are unable to invest in spares and pay for more leased aircraft to be released back.

There is also a shortage of skilled and experienced manpower, which hurts service and performance levels. Some airlines may claim to be doing well, but this is not always the case. The reality is that there is not enough MRO spare capacity, supply chain availability, or experienced manpower, and the demand is increasing for aircraft repairs and service validation. This has resulted in airlines struggling to meet the growing demand for aircraft repairs and service validation, affecting their overall service quality and performance levels.

Additionally, airlines do not have the exact frequencies or route network of 2019, making it difficult to offer the same lower prices and maintain their on-time performance.

2023: A Year of Gradual Growth and New Initiatives
Looking ahead to 2023, a complete recovery to 2019 numbers is unlikely. The market, price structure, workforce, and mindset of travellers and workers have shifted, and there are new expectations that need to be measured and delivered. While domestic localised markets will continue to improve, passenger volumes will not match 2019 numbers until early 2024. Therefore, 2023 is likely to be a year of planned gradual growth but with a smaller percentage. It will be a year of building confidence, skill set and competency, finding new initiatives and creative ways to drive revenue.

(Editor’s Note: Javed Malik is chairman of the Advisory Board of Ink Innovation.)

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