As a result of the Covid-19 pandemic, air passenger traffic in nations such as Vietnam, Cambodia, the Philippines and Thailand has decreased by 34 per cent, 34 per cent, 36 per cent and 40 per cent, respectively, according to the International Civil Aviation Organization. This decline in passenger traffic and load factor may have an influence on airlines’ income, which in turn may have an effect on future expansion and procurement plans. Air travel in Southeast Asia is expanding at the rate of about 10 per cent per year, with double-digit growth rates in Cambodia, Lao PDR, Myanmar, Thailand and the Philippines.
Overall recovery flair
Southeast Asia’s aviation market has encountered numerous obstacles on its road to recovery to pre-pandemic levels. Airline companies have made changes to their networks and business strategies in order to mitigate the effects, although real-time operation-level figures in the region remain at approximately 20 per cent of the level recorded in 2019. While disparate vaccination rates across countries and fresh pandemic waves in some places pose short-term challenges, Boeing’s prediction indicates that Southeast Asia’s long-term growth drivers for air travel continue to be strong. The region’s gross domestic product (GDP), air travel (revenue passenger kilometres) and fleet will all rise at the rate of 3.9 per cent, 5.5 per cen and 5 per cent, respectively, outpacing global average standards.
Increased supply occurs concurrently with increased pricing rivalry among airline operators. This in turn puts downward pressure on airfares and expands consumers’ travel options. Consumers will benefit from denser air traffic networks since they would be able to enjoy cheaper air travel to various places.
Travel within the Asia-Pacific area accounts for the majority of the increase in traffic volume in recent years. The Association of Southeast Asian Nations’ (ASEAN) open skies agreement will continue to promote the unhindered movement of people and goods between Southeast Asia and other parts of the world. Furthermore, during the last decade, demand for travel to and from China and northeast Asia has emerged as a new growth engine for the region’s aviation traffic. During this period, low-cost carriers (LCCs) have swiftly developed in both domestic and international routes, resulting in the business model more than quadrupling in size as a result of their massive expansion.
Several intra-regional routes in Southeast Asia are well suited for LCCs, and many key markets that are within the range of single-aisle airplanes have proven to be profitable as LCCs have emerged as the primary means of connecting rapidly growing leisure demand between these regions. Despite the near-term challenges for long-haul and premium traffic, pre-pandemic drivers and trends in this market sector are projected to prevail in the longer run, despite the current economic downturn. The newer problems have created a chance to restructure and strategically respond to the fast changing business environment, as well as to maximise the region’s long-term market potential.
Nation-wise recovery trends
Vietnam is a great example of a recovering market with both domestic and international networks. It demonstrated a successful Covid-19 approach, enabling a gradual resumption of domestic flights by late June 2020. After the second wave in July and August 2020, flights to Da Nang (a significant market) were cancelled, but capacity is being restored as the outbreak is controlled. Although Vietnam has achieved national success, international success will be gradual.
Singapore has been the most progressive country in the Asia-Pacific area in terms of opening up of the borders. Along with concluding various agreements covering essential travel, Singapore unilaterally eliminated quarantine rules for several nations, including New Zealand, Vietnam, Brunei and most of Australia. Most of these quarantine removals are not reciprocal, so their usefulness is limited, but they represent a positive step. A proposed travel bubble between Singapore and Hong Kong will extend significantly wider, as it will be bilateral and reciprocal.
The two governments have indicated their intention to enable quarantine-free travel between the two markets; however Covid-19 testing will remain mandatory. Apart from adding a third runway, Singapore’s Changi airport expects to open Terminal 5 by the end of the decade, with a capacity of 50 million passengers per year.
After the 2014 political crisis, Thailand’s tourism and aviation industries are rebounding. Due to the expansion of religious tourism in ASEAN markets, there are numerous more prospects. For religious holidays like Eid, domestic air travel advantages Indonesia. About 4.6 million people participated in mudik (homecoming) in 2016.
Myanmar banned international commercial passenger flights, with the exception of relief, medical evacuation and special flights, as well as the issuing of all sorts of visas to foreign citizens from all nations, following the March 2020 report of the first two Covid-19 positive cases. International travel will be resumed by the first quarter of 2022, according to new plans unveiled recently. Prior to the reopening of foreign tourism, the country’s border crossings with Thailand will be reopened as well.
The Lao Ministry of Information, Culture and Tourism have created the Tourism Recovery Roadmap for Laos 2021-2025, with the goal of increasing internal travel to aid in the recovery of the Covid-affected sector. The road map outlined three major policy options – supporting and promoting domestic tourism; establishing travel bubbles with low-risk countries, and greening tourism for environmental sustainability and long-term recovery.
Air travel in the Philippines is showing signs of revival as local mobility restrictions are eased, despite the country’s continued isolation of foreign tourists. Cebu Air has resumed hiring cabin crew and is currently operating at roughly 40 per cent of its domestic capacity.
Domestic passenger movements at Malaysia Airports increased by 74 per cent in September 2021, mainly due to the success of the Langkawi travel bubble and the implementation of the National Recovery Plan (NRP). The increasing trend is bolstered further by the relaxation of interstate travel restrictions in all areas except those currently subject to the Enhanced Movement Control Order (EMCO). It continues to be a critical mode of transportation for aviation and economic revival.
Southeast Asia’s aviation market has enormous potential, as several countries seek to expand their commercial and military aviation fleets. Foreign firms dominate the aviation market in this region. The Boeing Company, Airbus SE, Lockheed Martin Corporation, Textron, Inc., and Rostec are among of market’s leading participants. Airlines such as Vietnam Airlines, Garuda Indonesia and Singapore Airlines have scheduled aircraft deliveries between 2021 to 2026 as part of their development and fleet modernisation strategies. Thai Airways intends to phase out several Boeing 747-400s and Boeing 777s in the next years and replace them with 15 newer-generation aircraft as part of its fleet modernisation strategy. The aviation sector in the region is expected to grow as more and more travel destinations are offered by both premium and low-cost carriers.