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CAPA Live: Asia Pacific aviation update, Apr-2021

Analysis

Each CAPA Live, held on the second Wednesday of each month, contains a summary of the latest key developments by region.

In this report:

- Asia Pacific continues upward trend.

- Asia Pacific: COVID-19 cases per country.

- Asia Pacific: COVID-19 vaccinations per country.

- China: continued impressive domestic capacity rebound.

- Australia: ready for the trans-Tasman bubble. 

- New Zealand: continued impressive domestic capacity recovery.

- Singapore and Hong Kong: less than favourable capacity projections.

- Japan: robust domestic capacity projections through to the end of the year.

- South Korea: a shining example of domestic capacity recovery.

- Vietnam: a strong domestic outlook. 

Asia Pacific continues upward trend

Asia Pacific: total capacity as a percentage of 2019 levels, 30-Dec-2019 to 31-Mar-2021

<a class=Asia Pacific: total capacity as a percentage of 2019 levels" width="697" height="151" />

April is a relatively positive dashboard, with a green arrow for every key metric, including ASKs, total seat capacity and cargo Kg capacity. 

Asia Pacific: ASK, total seat capacity and total cargo capacity, Mar-2021 vs Apr-2021

ASK Total seat capacity and total cargo capacity

Asia Pacific: fleet in service, Mar-2021 vs Apr-2021

<a class=Asia Pacific Fleet" width="700" height="216" />

Most impressively now, only 20% of the Asia Pacific region’s aircraft fleet remain inactive, up 4.3ppts from Mar-2021. Capacity has once again grown, showing signs of a sustained recovery, in some key regional markets.

Asia Pacific: COVID-19 cases per country

The Asia Pacific is doing relatively well compared with most other regions.

As can be seen, many countries within the region have essentially supressed or eliminated the virus, including New Zealand, Australia, Singapore, Vietnam, Taiwan and China

Asia Pacific: COVID-19, new weekly cases per country

Covid cases ASPAC

However, some nations are struggling with new COVID waves, including dramatic rises in India, the Philippines and Bangladesh.

Asia Pacific: COVID-19, new weekly cases per country, India, Philippines and Bangladesh

ASPAC Covid cases

The graph below shows the major markets within the region and their current COVID-19 vaccination rates. Along the vertical axis is the percentage of the population that has currently received one or more doses, and along the horizontal axis is the total number of people that have received a vaccine.

Asia Pacific: COVID-19 vaccination rates, by numbers vaccinated (one or more doses) and percentage of the country's population 

ASPAC vaccinations

It’s been regularly assumed that the vaccine is the key to reopening the world’s aviation industry. Although this may be true for international travel, it certainly isn’t the rule within the Asia Pacific region for domestic travel.

Taking Australia as an example: because of the success of supressing the virus in the country, vaccination rates are currently low compared to other nations. Nevertheless, domestic capacity within Australia has rebounded at remarkable rates in recent months. Similarly in New Zealand, Vietnam, and South Korea – all with low rates of vaccinations so far, and they have shown impressive domestic recoveries.

International is a different story, however, and the region’s key hubs, Singapore and Hong Kong, continue to have very limited activity apart from cargo services.

Any international travel corridors that do open within this region will arise between countries or territories that have suppressed COVID-19, such as between Australia and New Zealand, whose travel bubble opens on 19-Apr-2021.

China: continued impressive domestic capacity rebound

China was the first country to experience the effects of COVID-19. This can be seen where capacity dropped dramatically in Feb-2020, which was more than a month earlier than in almost all other countries. The first outbreak was handled effectively, and since then domestic capacity has recovered at a remarkable rate.

The dip in domestic capacity in Feb-2021 was a direct result of government moves to limit Lunar New Year holiday travel, which was followed by yet another impressive domestic rebound from late February.

China’s domestic market recovery is one of the most positive stories in the industry to date. However, as can be expected, international capacity has a long way to go. 

China: domestic capacity, Dec-2019 to Dec-2021

<a class=China domestic capacity" width="700" height="147" />

China: international capacity, Dec-2019 to Dec-2021

<a class=China international capacity" width="700" height="159" />

Australia is another country that has successfully supressed the virus.

As in the rest of the world, capacity fell dramatically in Mar-2020 with the first global outbreak of COVID. Australia managed the outbreak well, and became one of the first countries in the world essentially closing its international border.

This strategy proved successful, but because the internal states also closed, in response to outbreaks in other states, domestic capacity has failed to achieve a sustained increase.

Over the period Jul-2020 to Sep-2020 Australia suffered from a severe second COVID wave in Melbourne, one that led to one of the strictest lockdowns.

Domestic capacity continued to remain supressed, but as cases then fell to nearly zero, that led to a sharp increase in capacity just before Christmas 2020, when state borders began to reopen fully.

Over the New Year period there was a third, small cluster of COVID in multiple cities around Australia, and domestic capacity declined.

Now, community transmission of COVID has all but been eliminated from Australia, and this is reflected in the domestic market recovering to 78% of 2019 levels. This strategy of closing international and domestic borders initially harmed the aviation industry, but now, domestic aviation in Australia is benefitting.

The projections for Australia show a significant increase of domestic seats through to the end of the year, but because of a slightly slow rollout of the COVID vaccinations, international capacity will likely lag other nations that gain herd immunity sooner.

Any international increases in capacity will be driven by the trans-Tasman travel bubble with New Zealand.

Australia: domestic capacity, Dec-2019 to Dec-2021

<a class=Australia domestic" width="700" height="155" />

Australia: international capacity, Dec-2019 to Dec-2021

<a class=Australia international " width="700" height="155" />

New Zealand: continued impressive domestic capacity recovery

New Zealand, much like Australia, eliminated COVID-19 early on, and once again, the benefits of this strategy are clear.

New Zealand’s domestic capacity gained momentum in Jun-2020, after reaching record lows. Since then, the steady increase in capacity now means the country’s domestic market is near to 2019 levels.

As in Australia, international capacity is likely going to take far longer to recover.

However, on the 06-April-2021 the New Zealand Prime Minister Jacinda Ardern announced a two-way travel bubble with Australia, scheduled to take effect from the 19-April-2021.

In May-2021 CAPA Live will be looking at the full impact of this travel bubble on international capacity; however it's currently projected to offer only modest gains in the near term because consumer confidence has been undermined by vagaries over borders, and whether they will indeed stay open.

New Zealand: domestic capacity, Dec-2019 to Dec-2021

NZ Domestic

New Zealand: international capacity, Dec-2019 to Dec-2021

NZ international

Singapore and Hong Kong: less than favourable capacity projections

Singapore and Hong Kong, with their purely international aviation markets, have suffered dreadfully from an aviation perspective, despite managing COVID rather well.  

Forward projections for Singapore and Hong Kong are uncertain, and far less favourable than for other markets covered here that enjoy the benefit of having relatively large domestic markets.

Singapore: international capacity, Dec-2019 to Dec-2021

<a class=Singapore international" width="700" height="145" />

Hong Kong: international capacity, Dec-2019 to Dec-2021

HK International

Interestingly, Japan's capacity didn’t decline as fast as in many other nations when COVID spread in the first wave, but early success in supressing the virus meant that domestic capacity recovered more rapidly than elsewhere in the region.

In recent months high numbers of new cases, and a state of emergency declared in several prefectures (including Tokyo), has led to losses in those capacity gains.

Once again, internationally Japan has a significantly suppressed market, with few signs of a recovery anytime soon. COVID vaccination rates are low, at less than 1% of the population to date.

Japan: domestic capacity, Dec-2019 to Dec-2021

<a class=Japan domestic" width="700" height="149" />

Japan: international capacity, Dec-2019 to Dec-2021

<a class=Japan international" width="700" height="143" />

South Korea has had a very similar experience to Japan's. COVID-19 cases were low for much of 2020, however in Nov-2020 increased significantly and authorities have struggled to control outbreaks since. Yet domestic capacity has exceeded 2019 levels, even with the high case numbers.

Projections are that the domestic market will continue to do well, whereas international capacity will likely remain supressed for much of 2021.

South Korea: domestic capacity, Dec-2019 to Dec-2021

SK Domestic

South Korea: international capacity, Dec-2019 to Dec-2021

SK International

Vietnam is yet another Asia Pacific country that has managed COVID well. International capacity has been suppressed since Mar-2020, but the domestic market has grown, with current capacity exceeding 2019 levels.

The projections for Vietnam, like those for many other countries in this region, show robust domestic recovery with continued suppression of international capacity.  

Vietnam: domestic capacity, Dec-2019 to Dec-2021

<a class=Vietnam domestic" width="700" height="149" />

Vietnam: international capacity, Dec-2019 to Dec-2021

<a class=Vietnam international " width="700" height="143" />

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