Asia-Pacific recovery stalls | News | Airfinance Journal

Asia-Pacific recovery stalls

Long regarded as a beacon of hope for the industry’s recovery, the Asia-Pacific region is trailing revival forecasts, suggesting that losses this year could be much larger than previously projected.

In July, the International Air Transport Association (IATA) predicted that the global airline industry would lose $84.3 billion in 2020, with Asia-Pacific airlines forecast to post the largest absolute losses of $29 billion. In its July report, IATA said global passenger numbers would decline by at least 55% from 2019.

These numbers are no longer feasible, according to more recent data and various industry experts Airfinance Journal has spoken to over the past week.

The latest data published by the Association of Asia Pacific Airlines (AAPA) shows that international passenger demand has remained completely suppressed since April 2020, due to ongoing border closures and other “onerous forms of travel restrictions”.

Unlike in the European Union, with its mostly reopened borders that make air travel possible, many Asia-Pacific borders remain shut to visitors from neighbouring countries. Another point to note is that two major air hubs in the region – Hong Kong and Singapore – have no domestic markets to fall back on.

Asia-Pacific airlines carried only 844,000 international passengers in July 2020, more than 97% lower than in July 2019. Available seat capacity was at 8.3% of the level last year.

In Europe, in contrast, there are airlines aiming to offer up to 80% of pre-Covid capacity in September.

And while cargo is providing some much needed revenue, in Asia-Pacific the freight sector was booming a year ago, so cargo traffic measured in freight tonne-kilometres (FTKs) actually is down by 16% year on year, although load factor is up 10 percentage points to 69.7%.

“International border closures affecting more than 50% of destinations worldwide, and other forms of onerous travel restrictions, continue to cripple international travel. Prospects for a more substantive recovery of the aviation industry are stalled as a result, severely impacting the wider travel and tourism sector,” said AAPA director general Subhas Menon.

“It is critical that governments act urgently to review existing restrictions and prepare for the safe reopening of borders, implementing appropriate risk management protocols in line with ICAO CART recommendations,” the AAPA chief added.

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