Asia Pacific airlines: state of the industry; part one - more hurdles in international recovery
For the Asia Pacific airline industry, 2024 has been marked by more hurdles on the path to full recovery of international capacity and traffic.
The region's overall capacity has moved much closer to 2019 levels, but new and familiar challenges meant that the rate of growth slowed significantly compared to the previous two years.
This overview is based on a presentation by Adrian Schofield, CAPA - Centre for Aviation and Aviation Week Network senior air transport editor for Asia Pacific, at the CAPA Airline Leader Summit | Asia in Hong Kong on 5-Nov-2024.
Part one of this report discusses overall recovery trends in the Asia Pacific market from multiple angles, as well as looking at Thailand as an example of how these trends are playing out.
The second part will look at further market examples in mainland China, Japan, Hong Kong and India, as well as examining aspects such as aircraft order backlogs, LCC market penetration, and challenges for 2025.
- Asia Pacific international recovery rate versus 2019 is at 94%, while other regions are over 100%.
- Asia Pacific international seats have increased by just 4% vs the start of 2024, and 16% year-on-year.
- All of the top 10 domestic city pairs are in the Asia Pacific region, and six of the top 10 for international.
- Thailand international visitors are still 13% below 2019; tourism accounts for 20% of all jobs there.
- China was Thailand’s leading visitor market in 2019, but tourism from China is only 55% recovered.
Asia Pacific recovery is still trailing other regions
First, let's take a look at the recovery rates for international capacity in different global regions.
The chart below shows that Asia Pacific recovery has trailed significantly behind the other major regions, and the global average.
This was mainly because many countries in the region were relatively slow to reopen borders, so Asia Pacific recovery had a later start.
From around 2022 the rate of growth was higher in Asia Pacific, as its recovery ramp-up gained pace.
The other regions and the global average are now all above 100% recovery - with Europe and North America both at 107% - but Asia Pacific airlines at still at 94%.
So the gap has closed, but it is still notable.
The chart also shows that all of these regions have flattened out a bit in 2024.
For example, the Asia Pacific international recovery percentage has hovered in the high 80s and low 90s range for all of this year 2024.
International recovery rates versus 2019 levels, by region, from 2020
Growth in the Asia Pacific region has levelled off
The next chart looks more specifically at international recovery in the Asia Pacific region.
It shows steady growth during 2022 and in 2023, although there was little increase through 2024.
Weekly seat numbers increased by just 4% from 1-Jan-2024 through 21-Oct-2024, although the year-on-year increase is 16%.
Asia-Pacific international capacity, by year (weekly seats), 2019 to 2024
There are a few reasons why the recovery gap has been hard to close.
One of the main reasons is that is that there are some major markets, most notably mainland China and Japan, where international demand has been slow to improve.
Another factor is that supply chain bottlenecks and production delays have slowed new aircraft deliveries and kept many narrowbody aircraft grounded.
Then there are macroeconomic headwinds that are slowing demand, and geopolitical issues that affect traffic in some markets.
The top 10 domestic city pairs are all in Asia Pacific
Variations of this chart have been used often before, but it's worth including, because it demonstrates the strength of the domestic recovery in Asia Pacific.
The chart shows that all of the top 10 domestic city pairs in the world are in the Asia Pacific region - four in China, three in Japan, and one each in Vietnam, South Korea and Australia.
Top 10 domestic city pairs by weekly seats (global)
The highest ranked non-Asia Pacific route on the list is between São Paulo and Rio de Janeiro, at the 12thposition.
The first US city pair is Chicago-New York, at 17th, and the first European domestic route is Moscow-St. Petersburg at number 40.
At the same point in 2019 nine of the top-10 domestic routes were in Asia Pacific, although only two were in mainland China.
Asia Pacific city pairs are still very well represented in the international top 10
Asia Pacific routes are almost as dominant in the international rankings, accounting for six of the top 10 city pairs and four of the top five.
The first city pair involving mainland China, which is Shanghai-Tokyo, is 15th.
Seoul, Tokyo and Taipei appear a couple of times each in the top 10.
Top 10 international city pairs by weekly seats (global)
At the same point in 2019 seven of the top 10 international city pairs were in Asia Pacific.
Singapore was on the list three times, with Tokyo, Bangkok, Hong Kong and Taipei twice each.
Interestingly, all of the Asia Pacific city pairs in the 2024 top 10 are short haul or medium haul routes within the region.
The first route from Asia Pacific to another region is Mumbai-Dubai, at 52 on the list.
The first route from Asia Pacific to a US city is Tokyo-Los Angeles at 78, followed by Tokyo-Honolulu, at 82.
And the highest ranked city pair between Southeast Asia and Europe is Singapore-London, at 100.
This underlines the fact that short haul international routes have generally recovered better than long haul routes for Asia Pacific airlines.
Thailand's international traffic remains short of full recovery
Turning to specific markets, let's look first at Thailand, which is one of the region's leading tourist destinations.
The chart below shows that international capacity in Thailand was still down by about 17% as of the week of 21-Oct-2024
Thailand international capacity, by weekly seats, week commencing 21-Oct-2024
The next chart shows that while monthly visitor numbers have improved from 2023, they are still down 13% from 2019 levels: this is a big deal in a country where tourism accounts for 11% of GDP and 20% of total employment, according to the Bank of Thailand.
Thailand: monthly visitor arrivals, from 2021
The key China-Thailand tourist flow has trailed the average
Chinese visitor numbers to Thailand are particularly low.
The next chart shows that visitors from China to Thailand were still at just 55% of 2019 levels in Sep-2024.
Thailand's monthly visitors from China, from 2021
Why is this important? The following chart shows that Chinese visitors made up 28% of Thailand's total tourism in 2019 - nearly three times more than the next largest source market.
Thailand annual visitors in 2019, by source market
It's a similar story in Vietnam.
China was the leading source of visitors there in 2019, but numbers were still down by 57% in Sep-2024.
And in the Philippines, Chinese visitors are at just 13% of 2019 levels.