Air travel demand still trails in Asia-Pacific, with China growth the key variable
Asia-Pacific international passenger demand is swiftly catching up to that of other regions, despite the continuing slow pace of recovery in the key China market.
Data from the Association of Asia Pacific Airlines (AAPA) shows that this region has the lowest demand recovery globally - by a large margin in some cases. However, the rate of increase is also far higher in Asia-Pacific compared to the other regions, which signals that the gap is continuing to close.
The mainland China market remains the wild card, as it has been since the start of the region's post-pandemic recovery. Although other markets have increased their relative importance, China international travel growth would need to accelerate for the broader region to fully recover.
AAPA Director-General Subhas Menon discussed these trends during the group's annual assembly on 9-10-Nov-2023. This occurred just a week after the CAPA - Centre for Aviation Asia Aviation summit in Kuala Lumpur on 2-3 November 2023, where the China market was also a major topic of conversation.
- Asia-Pacific demand was at 69% versus 2019 level over nine-month period, and 79% for Sept-2023.
- The annual growth rate for capacity and traffic in Asia-Pacific is far ahead of other regions.
- Excluding China, the Asia-Pacific demand recovery would be at 89% of pre-pandemic level.
- CAPA - Centre for Aviation data shows Asia-Pacific capacity is now at 83.2%, while global average is already at 103.6%.
- China is still the passenger demand leader in the Asia-Pacific region, but others have gained ground.
Demand has essentially recovered in most other regions, but Asia-Pacific still has some way to go
Airlines in the Asia-Pacific region saw international demand reach 69% of 2019 levels for the nine months through 30-Sept-23, said AAPA's Mr Menon. This data comes from AAPA and IATA.
In contrast, the North American, European, Latin American, and Middle East regions were all in the 90%-100% recovery range for the same period, as the chart below shows.
Operations are growing fastest in the Asia-Pacific region, however.
For the nine months through Sept-2023, Asia-Pacific traffic was up 171% year-on-year and capacity was up 130%. Traffic and capacity growth were below 40% for all the other five regions.
Recovery rates and year-on-year ASK/RPK growth for global regions, year to Sep-2023
Looking at the month of Sep-2023 on its own, Asia-Pacific passenger numbers reached 79% compared to the corresponding month in 2019, according to AAPA.
Of course, the sequential improvement means the percentage is higher in Sep-2023 than for the nine-month period.
Excluding China, Asia-Pacific demand recovery would be close to other regions
The delayed recovery of Chinese travel is having a large effect on demand in the overall Asia-Pacific region. Excluding China, the region's international demand would be at 87% of 2019 levels, said Mr Menon.
China's international passenger demand was at 34% of 2019 levels for the nine months through 30-Sep-2023, and reached 54% for the month of Sep-2023.
Full recovery of international travel to and from China could occur around the middle of 2024, Mr Menon estimated. "The return of Chinese travellers in full force will kick off another wave of growth for the region and global tourism," he said.
The chart below highlights the importance of the China market in the Asia-Pacific region before the pandemic, and its reduced share afterwards as it recovered more slowly than other countries. India, in particular, has increased its market share.
China accounted for about 20% of the broader region's international traffic in 2019, according to AAPA. However, this share was at just 10% for the first nine months of 2023.
Meanwhile, India's international traffic increased to 8% of the Asia-Pacific total, versus 5% in 2019.
China and India market share compared to rest of region and world, 2019 and year to Sep-2023
Capacity data paints a similar picture: many other regions are already beyond 2019 levels
The numbers cited by AAPA largely align with data from CAPA - Centre for Aviation and OAG, although measurement parameters are slightly different.
The chart below shows the Asia-Pacific region's international capacity recovery - the bottom line - versus the other regions. Asia-Pacific capacity was 79% of 2019 levels in the first week of Sep-2023, rising to 82.2% at the end of the month.
So, the CAPA - Centre for Aviation capacity figures are fairly consistent with the AAPA estimate of 79% recovery in passenger numbers for the full month of Sep-2023.
As of the week of 13-Nov-2023, Asia-Pacific capacity had risen further to 83.2% of 2019 levels.
The other regions are in the 95%-115% range, with the global average at 103.6%.
International capacity recovery by region, as measured in weekly seats, 2020 to 2023
China is still the dominant market, although its lead has been reduced significantly
The two charts below, again using data from CAPA - Centre for Aviation and OAG, help illustrate China's reduced dominance of the Asia Pacific market in the post-pandemic period.
The first chart shows China's weekly international seats (arriving and departing) at nearly four million for the week beginning 25-Nov-2019.
China was well ahead of the other countries, and Japan was second, with just under 2.5 million. Thailand and South Korea both had more than two million weekly seats.
Asia-Pacific international capacity by country, ranked by arriving and departing seats for the week of 25-Nov-2019
The next chart shows the same measurement for the week of 20-Nov-2023.
China is still at the top of the list, but the gap to the others has closed significantly.
China accounts for just under 2.2 million, while Japan has more than two million. South Korea has almost 1.8 million, and India has risen up the rankings to fourth, with 1.7 million seats.
Asia-Pacific international capacity by country, ranked by arriving and departing seats for the week of 20-Nov-2023
China and Japan will continue to be the leaders in the Asia-Pacific region, although other markets have risen since the COVID pandemic
While Asia-Pacific is still the least recovered of all the global regions in terms of capacity and demand, it also has the steepest growth curve. So, it is seeing the same rate of growth that the other regions experienced earlier in their recoveries.
As the Asia-Pacific region gets closer to 100% of 2019 levels, the growth rate may decline somewhat. The last few markets to fully recover will probably be the ones that started latest - mainland China, and Japan.
However, these two markets will certainly return to pre-pandemic levels at some point, as they are too big and too important to the region not to do so.
But by that time, many other countries will have pushed well beyond their 2019 volumes.
China and Japan appear set to remain the two largest international travel markets for the foreseeable future, and they will likely stretch their lead again. But the gap may not be quite as large as it was before the pandemic, thanks to the rise of markets such as India.