17-May-2020 8:30 PM

Airline domestic route rankings highlight Asia-Pacific recovery

Analysis

Changes in the global rankings of domestic air routes illustrate that at least for now, Asia-Pacific markets are generally weathering the COVID-19 crisis better than those in other regions.

Having been severely affected early in the pandemic, domestic markets in Asia appear to have bottomed out sooner, and can reasonably be expected to be leaders in the airline industry's recovery.

Asia-Pacific city pairs have featured heavily in lists of the busiest domestic routes in recent years, and the pandemic has amplified their dominance. Remarkably, only four of the current top 100 domestic routes - as measured by capacity - are from outside the Asia-Pacific region, according to schedule data from CAPA and OAG.

This dynamic is partly due to the fact that some of the key domestic markets in Asia have not declined as much as they have elsewhere. And others in this region that were hit harder - such as China and South Korea - are now recovering.

The picture will remain volatile in the medium term as countries resume domestic flights at different times, which will affect the rankings.

It is also important to note that just because seats are being added back does not mean they are full, and load factors and demand remain weak. In many cases airlines have been flying routes with little or no passenger demand in order to maintain essential freight links.

Summary:

Many Asia-Pacific routes have either not declined as steeply or are rebounding sooner.
Top 10 domestic routes are all from Asia, although there are notable changes.
Australian, Saudi and Indian trunk routes have dropped out of top tier in rankings.
Only a handful of non-Asian routes are in the top 100, in contrast to nearly half in 2019.
U.S. and European routes are far down the list as recovery generally lags.

2019 ranking shows established pecking order for domestic routes

Comparing the top-10 lists of domestic routes for the current week and for the same period in 2019 helps to show the somewhat healthier condition of the Asia-Pacific region. Capacity has still been reduced, but it is all relative - markets in other parts of the world are hurting worse.

The list for the week of 13-May-2019 shows the usual suspects that would be expected to appear in the top tier. All were from Asia-Pacific, aside from the Saudi Arabian route. Jeju-Seoul is typically the world's busiest domestic route, and the Japanese trunk routes always feature strongly. The main domestic corridors in Australia, Vietnam, China and Indonesia were also on the list, as usual.

In fact, exactly the same routes made up the top-10 for the comparable week in 2018. Only the order in the lower half of the list changed slightly in 2019.

Top 10 domestic routes by weekly seat capacity for the week of 13-May-2019

Asian routes increase dominance in latest top-10 list

There are some notable changes in the make-up of the top-10 domestic list for 11-May-2020 (below). It is now exclusively Asia-Pacific - and more specifically, all the routes are in East or Southeast Asia.

The head of the list is similar to 2019, with Jeju-Seoul still first, followed by the two busiest Japanese routes.

Further down there is quite a different look. Notable absences this year are Sydney-Melbourne, Delhi-Mumbai and Jeddah-Riyadh, which have slipped out of the top tier due to domestic travel restrictions in these countries.

More Chinese routes appear on the 2020 top 10, reflecting the well documented rebound in domestic travel there. However, a few weeks earlier Beijing-Shanghai would not have been on this list, as restrictions on Beijing travel remained in place longer than elsewhere in China.

Top 10 domestic routes by weekly seat capacity for the week of 11-May-2020

U.S. and European routes slide much further down rankings

Markets in other regions are languishing in comparison. The only four non-Asia-Pacific markets among the top 100 domestic routes are in Bolivia, Iran (two) and Nigeria. This in stark contrast to the top 100 a year ago in 2019, when 47 of these routes were from outside the Asia-Pacific region.

The first U.S. route in the 11-May-2020 domestic rankings is all the way down at no. 133, which is the Los Angeles-Dallas Fort Worth market. Routes from Denver to Phoenix and Las Vegas follow at 143 and 145 respectively, and U.S. routes start appearing more frequently in the 200-300 range. This is a change from the 13-May-2019 rankings, when the New York JFK-Los Angeles route was 23rd.

The highest ranked European domestic route in the current rankings is from Rome to Catania in Sicily, which is 148th. Rome-Palermo follows at 166th, and Norway's Trondheim-Oslo route is 198th. Last year, Madrid-Barcelona was the highest placed European route at 41st.

Domestic markets suffer less than international during pandemic

Another interesting aspect of the overall rankings is that the busiest international route in terms of capacity - between Seoul Gimpo and Tokyo Narita airports - would only rank 30th on the domestic list for 11-May-2020.

A year ago in 2019, the top international route - Hong Kong-Taipei - was seventh on the combined list. This shows that domestic routes are generally holding up better than international - which is only to be expected, given the strict border rules imposed due to the pandemic.

More Asia-Pacific airlines look to restore domestic networks

The early leaders in restoring domestic capacity will soon have more company, as a growing number of Asia-Pacific airlines are revealing plans to restore previously suspended domestic routes.

This is certainly the case for Vietnam Airlines, which intends to have all of its domestic routes back in operation by July. This would mark a rapid increase from early Apr-2020, when it suspended all but three routes.

Air New Zealand is also re-establishing its domestic network. The country's government announced on 11-May-2020 that lockdown restrictions would be eased, prompting Air New Zealand to restore several domestic services. The airline currently operates to just seven domestic destinations, and will add another 10 on 18-May-2020. By 25-May-2020, all but two destinations will be reopened.

However, Air New Zealand will still only be offering 20% of its usual capacity for sale, as frequencies have been reduced and social distancing rules mean that many seats will be blocked.

The situation remains fluid in many markets. Korean Air has been adding back frequencies on its seven core domestic routes, and was scheduled to open another six of its thinner routes from 18-May-2020. However, the airline subsequently changed its plans and said that these six would remain suspended.

Domestic schedules - and rankings - will undoubtedly remain in flux

Korean Air's schedule shifts highlight that airlines will need to be willing to readjust rapidly as they restore domestic networks. An unpredictable demand environment will necessitate both advances and tactical retreats. Because of this, many airline schedules will remain in a state of flux for some time.

There are many factors involved - even if travel restrictions are lifted, people could still be reluctant to travel while COVID-19 remains a threat and the economic outlook appears bleak. Airline strategies and schedule plans must be flexible enough to accommodate a range of potential demand scenarios.

There will also be plenty of movement in the route ranking lists in the immediate future.

Governments and airlines will have widely varying timetables for resuming domestic flights, so markets will grow at different rates. The top four will probably not change much, but below that there will be a lot of churn in the forthcoming weeks and months before the market settles down again.