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It may seem like a lot longer, but it has been about a year since the initial surge in COVID-19 cases caused Asia-Pacific airline capacity to crash, in Mar-2020. 

Since then the airline industry has been through a downturn as deep as any it has ever experienced.

As the prospect of recovery looms closer, now is a good time to look ahead at some of the questions facing the region’s airlines.

Most Asia-Pacific airlines have been pursuing aircraft delivery delays in response to the COVID-19 crisis. Although several airlines acted quickly and secured deferrals relatively early in the pandemic, some important negotiations have occurred more recently. These latest arrangements highlight the differing approaches to deferrals being taken by the region’s airlines.  

Korean Air and Singapore Airlines are recent examples of airlines making substantial deferrals to push back spending commitments while also preserving their long term fleet renewal strategies.

The major Japanese airlines, however, are only making minimal postponements. The independent LCCs are generally trying to spread out their vast numbers of deliveries while some, such as IndiGo, are taking their aircraft as scheduled.

Few Asia-Pacific airlines will come through the pandemic without some degree of aircraft order deferments. In many cases these negotiations are key aspects of broader airline restructuring efforts.

Deferrals represent one of the main tools airlines have available for pausing growth and reducing fleet costs, along with early retirements, lease returns and order cancellations. Postponing rather than terminating orders is obviously preferable to manufacturers, particularly since Asia-Pacific airlines account for more of their order backlogs than any other region. Allowing delays also helps ensure customer survival.

It has long been the case that Istanbul’s airports have regarded themselves as in competition with those in the Gulf – especially for Europe-Asia transit traffic – rather than with those in Europe. And Istanbul’s new airport does have some geographical and operational advantages in that respect, as did its predecessor.

Now, as the country plots its way out of lockdown and with the main tourist season looming, that battle looks to recommence.

Istanbul Airport’s CEO is bullish about future prospects, no doubt taking his cue from the Prime Minister, but both the airport and the state airline will have to overcome the challenge from a rejuvenated Qatar Airways and Doha Airport, which have almost flourished during the pandemic.

Manila has long been regarded as an underachiever in aviation terms, the creaking Ninoy Aquino airport transporting far fewer passengers than peers at Singapore, Bangkok, Kuala Lumpur and Hong Kong, despite a high population to call on.

Expansion at Ninoy Aquino and at Clark International, formerly a US military airbase, was going some way to redressing the issue. But then along came not one, but two, proposals for new airports, each to handle 100 million or more passengers each year.

One of them, at Sangley Point, has been put on the back burner, although there will be a fresh tender.

But the hidden reason for the original process being cancelled suggests that Chinese firms, especially state-owned ones, may be about to find it more difficult to secure foreign airport development contracts.

Eurostat data for passenger air transport show significant price weakness in Europe in 2H2020, particularly for international flights. During the COVID-19 pandemic pricing has, on the whole, held up best when airline capacity has been at its tightest, and fallen more rapidly when airlines have sought to return capacity to the market.

This price elasticity is to be expected. At a time of damaged consumer confidence in air travel, caused by months of uncertainty over government restrictions and concerns over the transmission of the virus, demand requires strong price stimulation when capacity is growing back again. A lack of business travel adds to downward price pressure.

Total seat capacity in Europe is down by 75.4% in the week of 22-Feb-2021 – bumping along the bottom ahead of a hoped-for summer recovery and still lagging other regions.

Middle East is down by 57.1%, Africa is down by 54.0%, North America by 46.9%, Latin America by 45.9% and Asia Pacific by 40.9%.

Europe's passenger numbers have fallen worse than seat capacity throughout the crisis. Restoring consumer confidence will be a big challenge in realising the recovery.

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The pace of COVID-19 vaccinations is likely to be a key determinant of progress in the return of international travel in Europe. However, countries where vaccination is advanced may remain cautious to protect this advantage, especially against the threat of new variants of the virus.

For example, the UK has the most advanced vaccination programme among countries with more than 10 million people, but its 22-Feb-2021 roadmap out of lockdown envisages international travel returning no earlier than 17-May-2021. Even then, the lifting of travel restrictions is likely to favour other countries which also have high vaccination rates.

The US has also made good vaccination progress, but the European Union and Asia are lagging. This raises questions over the pace of recovery of short haul European travel this summer.

The two key long haul markets, Europe-Asia and the North Atlantic, have collapsed during the pandemic. Europe-Asia and European Union-US may remain weak until vaccination programmes at both ends equalise.

However, good vaccination progress in both the UK and the US raises the possibility that UK-US air travel might lead Europe's long haul recovery - although it is still uncertain just what the impact of vaccinations will have on international travel.

Tirana’s Rinas Airport performance over the last decade or so must have come as a surprise to many. It has grown passenger traffic steadily since it was first concessioned in 2005, as tourism into Albania has also increased.

Although available traffic data shows that in only one of the years 2009-2019 (2012) was there negative passenger growth. In all other years it ranged from a low of +3% to +19.8%, and with an average growth rate over those 11 years of +9.4%. There are few airports in Europe that can boast that consistency of growth.

Tirana Rinas Airport was described as “a model concession”, and that it could be “considered a success story, somewhat against the odds.” (CAPA analysis report, Jul-2015)

Now, after one change of concessionaire already, involving a Chinese joint venture, including a large international fund, the concession has changed hands again.

This time the airport is ‘coming home’ to a local conglomerate with strong ties to the government.

The non-financial factors of Environmental, Social, and Governance (ESG) increasingly dominate boardroom thinking about material risks and growth opportunities, and the air transport industry is no exception. Indeed, those factors are at the forefront, as everything the industry does is now measured in terms of emissions.

In Spain, representatives from across the industry have come together in a government-sponsored attempt to boost the Spanish aeronautical sector while placing Madrid as a global hub for both passengers and cargo, with particular respect to Latin American markets.

At the same time, sustainable working practices and new industries will be introduced in a sort of ecological airport city environment.

It is an ambitious project, involving both the public and private sectors, and the investment requirement is a heavy one.