Charting a course for recovery in Asia - what needs to be done to improve regional coordination and openness?

Transcript

Adrian Schofield:We have a panel today to talk about the recovery of the Asia-Pacific travel and airline industries, and we're going to look at aspects like recovery progress, potential bottlenecks, government policy responses, and longer-term demand trends. Some of these things Torbjørn and Jeffrey touched on, and Ching Kiat also. But I think we're going to hear some, some pretty interesting perspectives on some of those now. I'm sure you'd much rather hear from the experts than from me, so if I could welcome up our panellists today to come up to the stage.

Subhas Menon:Thank you, Adrian.

Alexander Lao:Hi.

Subhas Menon:Hi. Hi, Liz, how are you? Thank you.

Alexander Lao:Great.

Adrian Schofield:Well, we have with us today, from the far left there, we have Liz Ortiguera, who is CEO of Pacific Asia Travel Association. We have, as you just heard, Ching Kiat Lim, Managing Director, Air Hub Development for Changi Airport Group; Alexander Lao, who's Chief Commercial Officer for Cebu Pacific; and of course, Subhas Menon, Director-General of the Association of Asia-Pacific Airlines. Welcome everyone, and thanks for joining us. I thought perhaps, Subhas, we could, we could start with you. I know that next week You're meeting with your airline members in Bangkok with the AAPA annual meeting. So how is the recovery process— progress going for Asia-Pacific airlines? Where are we at now in general terms?

Subhas Menon:Well, you know, there is a basic mismatch, disconnect between the macroeconomic picture and the micro air travel picture. You know, globally, you know, I think the economic picture couldn't get any grimmer or gloomier than it is today, you know, with inflation driven by food and fuel prices skyrocketing. You know, US dollar, of course, is also on the rise, you know, which of course affects the purchasing parity of Many economies. And of course, supply chain woes, which is another government-made problem that we are encountering. But on the other hand, if you look at the air travel scenario, it's going great guns. Air travel is shooting through the roof. Pent-up demand is also driving airfares, which shows that the penchant for travel has returned. Basically, you know, you take a lot of things for granted, including the freedom to travel. You know, freedom to travel is actually now a basic human right. So when you have been deprived of the freedom to travel, people can't wait to get in the air again. On the Asia-Pacific side, I think air travel is growing leaps and bounds. You know, it's going by 5-fold, 6-fold every month, but we are still at around 42% of 2019 levels.

Liz Ortiguera:Why?

Subhas Menon:Well, the main reason is the elephant that is not in the room, which is China. China is an elephant, and as elephants do, they take a long time to get up, but once they do, don't stand in their way. Once China comes on stream, we are quite confident that the growth will multiply. So I think the prospects are still pretty promising for air travel, especially because of pent-up demand, as well as the fact that some of the markets just opened up very recently. Japan, for instance, South Korea, Hong Kong, these are all large markets which only came on stream in October.

Liz Ortiguera:Right. Okay.

Adrian Schofield:Thanks, Subhas. Liz, if we could turn to you now. From a broader travel industry perspective, how is the recovery shaping up in this region?

Liz Ortiguera:I think what's happening is really interesting because I often get asked, when will we return back to normal? The dynamics that are unfolding are really interesting because it'll take a different shape in the region. We're seeing, for example, from the government, you're seeing multiple governments wanting to promote alternate destinations, you know, for mice, for leisure. So there's, there's a, there's a broad-based interest in dispersion of travel. So that's one. Second is you're seeing the markets, you know, they're scrambling now in the absence of North Asia, China in particular. You're seeing them wanting to, you know, the savvy ones are diversifying who they're marketing to. So they're identifying new customers, new types of customers that they can do destination marketing to. So there's a complete, you know, and the, you know, which is spawning a market for low-cost carriers to these secondary tertiary destinations. So I think that there are many, there are a number of silver linings that are coming out of the, this, and we are still in the pandemic. So I'll say that this is the pandemic era recovery period. So I think it's very interesting.

Adrian Schofield:Great, thank you. Xander, how about with Cebu Pacific? How is recovery progressing for you in terms of domestic and international?

Alexander Lao:I think on the part of Cebu Pacific, the recovery has been 2 stories, right? So on domestic, I think we're over 100% already. People are flying. We've basically grown, in fact, Much more than what we were doing pre-COVID from a domestic level. International, though, has been at around 40%. So overall, our network recovery has been at around 80%-ish. It has been interesting in the sense that in the Philippines, and I guess most domestic markets throughout the world, things have opened up. We have a lot more exposure into North Asia. So the elephant in the room, China. Hong Kong, those markets are still closed. And some things that we're looking forward to reopening. When they will reopen is, I guess, anyone's guess. But clearly, some markets have started to reopen, which is good. Japan started to reopen. So we are seeing some green shoots of recovery. And it has been, I would say, a very mixed recovery. So So domestic has been doing really well, international not as quickly as we had hoped.

Adrian Schofield:Right, okay.

Alexander Lao:Thank you.

Adrian Schofield:And Ching Kiat, you covered a lot of ground in your presentation and with that fantastic video, but I wonder if just in a nutshell you could tell us what stage your recovery is at, and I'm particularly interested in connecting traffic, how connecting traffic is recovering in Singapore.

Ching Kiat Lim:Thanks. Well, the traffic— I think the traffic profile for the last 2 years has been quite crazy, if you recall. Because during the periods where borders were closed or border paths were closed in different timing, end up we saw connecting traffic rising quite a lot. Even over half of our traffic at one point was connecting traffic.

Subhas Menon:Hmm.

Ching Kiat Lim:Because also the supply was so constrained that people were trying hard to get from place to place. Now it has come down back to closer to our pre-COVID levels of about one-third connecting traffic. So I think we are happy to see the trends develop. We don't really have a specific target for connecting versus point-to-point or low-cost versus full-service. We are letting the market sort itself. But I think at this time where the dust is kind of settling, we are planning again on the normal basis. looking at airlines and working with airlines to find strategic partners in Changi. So we are looking ahead beyond the pandemic to see how to foster those partnerships, which was very strong before the pandemic, but we want it to be even stronger after this.

Adrian Schofield:Thanks a lot. Yeah, so moving on to talk about some of the recovery challenges. As we've heard on a few of the last sessions, we have seen some bottlenecks in different parts of the world that have caused service disruptions. So what do you think have been the causes for those? Are we over those, or is there a risk of more of that to come? If anyone wants to take a shot at that.

Ching Kiat Lim:I can take a shot at that. I think we observed from the other major airports around the world as well, I think there were services issues. I think mostly on 2 aspects. One is the airport infrastructure. They were like mothballed or shut down during the pandemic. And it took some time for recovery. The second, usually a theme that we see is the short of manpower, more specifically on the ground handling side of it. So for Changi, we were watching all these cases very closely and making sure that we are able to cope in those aspects. So like I mentioned earlier, for ourselves, the hardware, the 4 terminals have been just recently reopened, so that should be fine. But we are working very closely with our various partners, airlines, ground handlers, in terms of pacing out the slot requests. And we know that everybody is in a hurry to pull back slots, but we are also matching that with the manpower situation to make sure that on the ground things don't just fall sharply.

Adrian Schofield:Yes.

Ching Kiat Lim:So we are monitoring that during this period. Hopefully by early part of next year, when the manpower resources are full to its pre-COVID complement, I think we can move back closer to business as usual. But now we are watching a tight lid for my slots teams as well in terms of pacing out the new flights that are coming in.

Adrian Schofield:Thanks. That's interesting and it does emphasize how it is a multi-part problem. Yes. Anyone else have any perspectives to share on that?

Liz Ortiguera:Liz? I'll add to that. I know that the restart underscored for us the complexity, the incredible complexity across travel, you know, all the moving parts. And so one is recertifying or retraining. I know that that was a big challenge with pilots and also the ground handling crew. The second is around this whole global challenge of kind of a values reset that people had and the digital enablement. Now people could go back to their hometowns. They could spend more time with their families. There's a large segment that can now— doesn't need to be physically present. And so we're sort of competing with— we are competing with that large faction. And the other is just the quality of life. So one of the things that we need to address globally is how can we make it more appealing again to do service, to do operations, to be— You know, at a workplace. And so I think that requires— it's a multifaceted number of actions that need to be taken as a solution. Fortunately, here in Asia-Pacific, we're bearing the brunt of it less and in more a staged approach because, because our recovery is slower. So this is a time for us to prepare because I think that once the recovery hits, once China opens up, You know, the growth here will be tremendous.

Alexander Lao:Well, from our perspective, I think travel regulations continue to be inconsistent. So some markets are closed, some markets are wide open. I think it was touched on earlier, ground handling resources have been an issue. We have tried to expand in certain markets, but we have been told not to due to the lack of resources and again, the need for retraining and recruitment. I think the other part that maybe a lot of people don't see is in terms of the logistics support for aircraft. So key components are not produced or are not in stock as they used to be. So just as an example, we had an aircraft on ground for a week, mainly because the OEM wouldn't release the part, or you couldn't preorder the part, and it was on an emergency order. So those are also some of the things we're dealing with today. So ground handling shortages, components, and what do you call this, supply chain issues. I think some of those will take a while to resolve as the industry starts to gear up again. The other challenge has also been in terms of resource. So even if you've had the aircraft and crew, given that other parts of the world are recovering much more quickly, Than Asia Pacific. A lot more recruitment from overseas has been ongoing. I think we, for example, have got have scaled up recruitment mainly because we've lost like 100 cabin crew to a Middle Eastern carrier. So those are I guess some of the challenges that we also see. So there are some imbalances here in Asia Pacific, and given that the growth in other parts of the world are are much higher. Obviously, Asia-Pacific airlines will be a resource for some of those other airlines.

Adrian Schofield:Right, yeah.

Subhas Menon:It's a global issue, actually, because the world is, of course, hurtling towards a recession, but it's a recession in a job-full market. So this is very unusual. So unemployment rates are probably the lowest in the world. So it's not only aviation vacancies in general are on the rise. So for aviation, of course, what we need to do is to bring the sexy back. This used to be a very sexy industry. Everybody wants to join aviation. And for 2 years, people cannot just sit around twiddling their thumbs. So they have moved away, they have moved to other sectors. So it's going to be very difficult to get everyone back. So you need to attract people, you need to motivate people, and you also need to innovate. So for example, sustainability, you know, sustainability is a whole new ballgame. Governments investing in sustainable aviation fuels, for instance, will also create many new jobs, new income streams, you know, and also aviation jobs. So I think there's got to be a new direction. Jeffrey spoke earlier about making use of technology, biometrics, you know, to also ease the pressure on manpower.

Liz Ortiguera:Right.

Adrian Schofield:Thank you very much. I can always rely on you for some very quotable quotes. Yeah, that was interesting hearing about some of those issues. And Xander, one thing I kind of keyed on from you is that a lot of these Airport bottlenecks are occurring not in the Philippines, but in other countries that you fly to, more so than your hub. Is that sort of—

Alexander Lao:Yeah, well, and that's even before China comes back. Yeah. So you can imagine, I think Singapore, I think Changi will attest to this, but when China does come back and reopen, are there going to be enough ground handling resources in the region to take that surge? I mean, Hong Kong has reopened somewhat with their zero-plus-three policy, right? But do they have enough ground handling staff? Are their pilots— do they have enough pilots? Do they have enough crew? So it's not just a— it certainly is a more global problem, so to speak. It's funny because one of the suppliers we were speaking with in Australia was saying, why would you want to be a ground handler when— or ground operations staff when you're going to get paid much more as a barista in Starbucks?

Subhas Menon:Yeah.

Alexander Lao:So that's one of the challenges. How do we bring the sexy back is a challenge. But clearly, it's not something we see just in the Philippines, but throughout our network. And investments in digitalization, making it more efficient, making it more seamless for passengers, are probably going to resolve some of the labor issues that we're seeing today.

Adrian Schofield:Right.

Subhas Menon:Okay.

Adrian Schofield:And then of course, there's the whole longer-term issue, which is a whole other thing, isn't it?

Alexander Lao:Yeah, I think some of the labor issues have been here pre-COVID, whether it's pilot crew shortages or engineers. I mean, everyone thinks it's a COVID-related issue. Reality is, even pre-COVID, these resources were already scarce, right? So we had a lull for a couple of years, which is great. And then now all of a sudden, some parts of the world are growing back much more quickly, and those resources are going to be once again scarce. So it'll be a challenge for us to, I guess, from an airline perspective, how do you continue to retain, recruit, and keep some of those talents?

Adrian Schofield:Right. Anybody else want to talk about either longer-term workforce potential issues?

Liz Ortiguera:Just on that point of making our industry more attractive, I think more than ever, corporate culture and quality of life on the job is going to be critically important. And I think if you can celebrate great service, if you can celebrate You know, different aspects because there's so many— the spectrum of jobs that travel and tourism requires is so broad. To find a way to recognize and appreciate your staff is going to be really important. And the other aspect I think is, you know, if you look at the millennials and Gen Z, they want a sense of purpose and mission. And so engage them as you, you know, as much as you can. you know, create the right mission and find ways, you know, I think our industry did an incredible heroic job in terms of supporting the recovery, you know, the humanitarian efforts that were made. You know, and that's something to— I don't think that's spoken about enough. You know, we had hospitality staff staffing field hospitals.

Alexander Lao:Mm-hmm.

Liz Ortiguera:We had vaccine deliveries and medical supplies being done, you know, to remote areas. I think there's a lot Make them proud to do the job that they're doing and make them proud to be part of your organization.

Subhas Menon:Well, for starters, I think we should commit to never close borders indefinitely. Because the situation we are in is really because of how badly travel and tourism was affected as a result of government regulations during this pandemic. This period. So that's one. I mean, lessons learned from COVID-19, never to do it again. The other thing is, you know, in the industry, in the aviation industry especially, there has been a lot of outsourcing.

Alexander Lao:Hmm.

Subhas Menon:So outsourced entities basically run some of the very important parts of the travel chain, ground handling, baggage handling, and that sort of thing. So when governments helped airlines and airports to retain their staff during this period, were they also helping the ground handling agencies? Because I think in many countries this was not the case. So that's where we lost a lot of staff, not only in Asia-Pacific region but globally.

Alexander Lao:Right.

Subhas Menon:Yeah, so I think, you know, some of these things we have to entrench and make sure that we don't make the same mistakes again.

Alexander Lao:Right.

Subhas Menon:Yeah, and of course, looking forward, I think, you know, we'll have to see how, you know, we can make the jobs in aviation, you know, more value-added, you know, rather than just mundane jobs, and make it more interesting with technology as well as in terms of moving with the times. So these are the things that I think the industry needs to hunker down and work on for the future.

Adrian Schofield:Okay, right. And turning now to the elephant that isn't in the room, as you very well put it, how important is the mainland China market to the industry? And what, if anything, can we deduce about what the timing might be on reopening?

Subhas Menon:Well, you know, for Asia-Pacific, China is very important globally. You know, they are both a huge producer as well as a receiver of visitor arrivals. So for Asia-Pacific, if you take the entire market, you know, domestic, international, system-wide, it's about 40%. For international travel alone, it's upwards of 20%. That is a huge impact. China is very important. If you look at how the global economies are doing, it's interesting to see that the emerging markets are actually faring better than the developed markets. Emerging markets growth projection for 2023 by IMF is the same as it was before the global economic crisis. ASEAN, India, you know, so there's something to be said about reopening your borders early, you know, and living with the virus, you know. So hopefully, good sense will also prevail in China, you know, and the Chinese government will sooner or later have to also move With the stream, you know. So we think that it will be sometime in 2023, but earlier rather than later.

Adrian Schofield:Right, okay. Anyone else on mainland China?

Alexander Lao:China is an extremely important market for the Philippines, second largest source market for inbound tourists, and probably was on pace to be number one had the pandemic not happened. I'm not as optimistic in terms of when they will actually reopen. I mean, in the previous— everyone was so optimistic actually with the recent political event in China, thinking that people— thinking that the government, the Chinese government, would actually scale back and say it's time to reopen. But it seems that they've actually doubled down on their dynamic zero policy. So when that will change is anyone's guess. Maybe it Whether it'll take an event or maybe a global body like WHO saying COVID is over, but they've not done that ever, right, for even the previous pandemic. So I guess ultimately the question for the airlines and the industry will be, if China doesn't reopen, are there going to be other new market sources or other new sources of customers? China's super important, without a doubt. But when they will open, hopefully by 2023, but it's really anyone's guess.

Liz Ortiguera:Raj?

Ching Kiat Lim:Yeah, I share the same views as before. I think it's anybody's guess when it's open, but I think it doesn't matter to me because in the near term our work is cut off for us. We are so busy chasing either new segments and getting back, so I think there's enough busy work for us to do. For example, for ASEAN as a whole, if you look at ASEAN as a whole, historically we have been attracting tourists from Europe coming to Southeast Asia for a multi-country destination. I think we lost some of that the last few years because we were slower in opening compared to the Americas. So now I hear that for the sun and beach holiday, Europeans, they go to the Caribbean, they go to Cancun and other— they do transatlantic So I think as a grouping, I think there's still a lot more work that we can do to shout to the world, we are back in business. Let's get all the tourists back to Denpasar, to Phuket from Europe. I think there's enough work for us to do while waiting for China to open or tapping tourists from Australia, from India. So I think quite enough work for us to do in the meantime.

Adrian Schofield:There's still a lot of latent capacity to get through before we hit that point. Liz, did you have anything to—

Liz Ortiguera:I would echo that same sentiment, I think. And I'll quote one hotel GM who said to me, thank goodness China didn't open up at the same time because, you know, they, they honed a domestic travel market. Now you've got new, new primary source markets that have been marketed to. And then the overlay of China, which of course is critically important. But, you know, we're already hitting staffing shortages in many countries. I think that, you know, my prediction— I can't say when, but I can say that my prediction about China will be that it will be knowing their zero-COVID policy and conservatism. It will get metered out, which is actually good for the industry. The question is how fast and when.

Alexander Lao:Yeah.

Liz Ortiguera:And, you know, because they won't open up the floodgates. I think it'll definitely be metered out kind of similar to the way Japan Yeah, that's a great point.

Adrian Schofield:It's not going to happen like that, is it? It is going to be probably a phase.

Liz Ortiguera:It's actually better for us. I think now is the time that, you know, we need to prepare for when, you know, when it does open up and make sure that we've got that, you know, and it's hard. I think the important thing right now is, and this is what we tried to do as PATA, is basically for our members, we, we try to create insights from varied sources because the way the spread of the virus is The speed and the dynamic of how we're going to open up and where we're going to open up is changing so rapidly. So it's really important to kind of take your insights from different sources and keep an eye out. So we actually launched about 9 months ago, we launched like a COVID travel dashboard. We've pivoted that now to travel recovery dashboard. So it focuses also on destination marketing. So if you check our website, you'll see that because week to week things are so Things are changing so fast, whether it's marketing approaches or it's policy, border policy changes, it's very dynamic.

Adrian Schofield:Right, that sounds like a good, useful tool. So turning to government policies, I guess it's no secret that there was a very fragmented response to the pandemic by governments around our region. I'm curious, what do you think, how did that change through the pandemic? And are we at the point we sort of need to be in terms of government coordination now?

Liz Ortiguera:Well, I'll say that it's incredibly complex here in the region because we don't have a unified approach. We've got different levels of health infrastructure in different countries. But I'll say, part of my background, I was in pharma R&D previously. So I had the view into— of the medical world, and I also had the view into, you know, travel and business development. I think that even within— if, you know, if we think back to what it was like a year ago, even within the medical community, there was so much uncertainty, and there was also very different viewpoints from conservative to liberal. And so, you know, and that's, you know, a year ago, a year and a half ago is when the health ministries were really, you know, we needed Our tourism ministers needed to take direction from the health ministry. They were the final say because public health was the be-all end-all. And imagine that— remember the time when their only measure of whether they could relax measures was to watch the ICU capacity. We were at that extreme. So now if we think about the complexities of what's happening in the medical field, in trying to manage public health, and then the complexities of our industry. I mean, you can understand putting those two together is what we lived through. And we're still living through that.

Adrian Schofield:Mm-hm.

Liz Ortiguera:And I think that— and you had all this broad spectrum of conservative to liberal in the political and how they were managing customer sentiment across the countries in Asia-Pacific. You know, we were more conservative, of course, than the West, and that's why we've got, you know, quite high vaccine deployment rates, which I think is a great— it's a great foundation for us and our restart. I think that was quite important to put as a foundation.

Adrian Schofield:Right, yeah. I mean, it's a shame that politics did come into it, but it sure did. Anybody else want to talk about how sort of that— the fragmentation among government responses in our region Perhaps changed through the pandemic?

Subhas Menon:Well, I would say that it hasn't really changed. Right. You know, so, I mean, the industry was always calling for coordination and harmonization among governments. It still hasn't changed. We heard about 26 travel apps, you know, by different governments, you know. But the fact that they rolled out all these travel apps to make it easy for people to make use of health certification to get through to other countries is actually a good learning point. And maybe they can take that as a step to also provide for pre-verification and pre-clearance of border entry requirements. So people can travel with digital travel credentials. They don't need to bring a passport. They don't have to queue up at immigration counters. So I think that's the next step in the travel evolution, but we need governments to come on board. And one of the bad lessons from COVID was that there was a lack of coordination and harmonization. So If governments can get together and start talking about this sort of thing for the future, I think that's a step in the right direction. But otherwise, the lack of harmonization was the main problem right through the COVID pandemic period.

Alexander Lao:I would say, though, harmonization is extremely difficult based on each country's vaccination rates, hospital capacity, so on and so forth. So that's been pretty difficult. I mean, even from a Philippine context, every city had its own regulation. So can you imagine we were dealing with that domestically and internationally? But having said that, I think it really does take one, because vaccination rates are higher, fatality rates have been substantially lower. It really does take one country. If one country actually led that, We saw other countries reopen relatively quickly. Singapore was probably the first one in Southeast Asia to have opened up. To be fair, the Philippines was also one of the first countries to simplify their entry regulations. And once you saw Singapore, Philippines, Thailand, then all of a sudden, all of Southeast Asia, in a matter of a few weeks, if not a week, had all opened up. So I think it really does take one country. Having a coordinated approach across countries is probably extremely difficult. Politics has such a key part in that. If it was all just medical and science, it would have been a much easier rollout. But again, different views. And having one country or having a country come up and say, hey, guess what, we're open, these are the regulations, these are the standards, we've made it simple for people to come in, we made it seamless for people to come in, you just see travel go up really quickly. I mean, between, say, Manila to Singapore, that was one of the routes that since Singapore had opened up quickly, our planes were chock-a-block full. We continue to add capacity.

Liz Ortiguera:I heard many governments a year ago, I heard many governments saying they were watching what Singapore would do. Because Singapore is like a pilot market. Well-resourced and studied, conservative in approach. And so they were looking at Singapore as a best practice case.

Adrian Schofield:Ching Kiat, obviously, I guess that's your experience as well, that Singapore was pretty much a leader in this region.

Ching Kiat Lim:I guess learning from the last 2 years' experience has taught me one thing, is to be very humble in approach. I think most countries, they trip. All the governments admitted they make wrong calls now and then, and they evolve in the process. I think what the points have been covered is that I think moving forward, moving on a very science-based approach, I think that has helped. We were having many dialogues with the government to say, just open up the borders, let the numbers come in, and then you can fine-tune based on statistics. But if the borders are forever closed, you're none the wiser, right? You're just based on certain hypotheses, but you can't even test that.

Subhas Menon:Right.

Ching Kiat Lim:So I think for Singapore's case, the Vaccinated Travel Lane provided part of that. They opened up country by country, then once they get a comfort level, they prepare for the bigger opening. So I think it's a learning process. I think most important of all, before I talk about coordination, is maybe across the governments to share the learnings so that everyone learns what were the mistakes made or what were the successes, and then hopefully we're more prepared for the next one.

Adrian Schofield:Yeah.

Subhas Menon:And also the realization that actually, even though borders were shut, there was no air travel, cases were surging. So it's actually happening within the community rather than through air travel. So I think that was one realization that helped governments to move on.

Liz Ortiguera:One of the initiatives that we did as PATA about a year ago was we started like a closed forum for our government members. And what I wanted was a more relaxed forum where we could invite speakers to give best practices. And for example, we had, whether it was WHO or it was Singapore government, I wanted— normally these destinations compete, but that was not the time to compete. It was the time to do best practice sharing, whether it was health and safety protocols or it was destination marketing. And so I think that in a small way, my hope is that that helped enable some of the progress.

Adrian Schofield:Right.

Alexander Lao:Yeah.

Adrian Schofield:I feel like we could spend an hour talking about any one of these topics and still be coming up with really interesting stuff. But our time is running out. So perhaps if we could move on to demand outlook. Demand is strong now with constrained capacity, but I'm curious what you think about what happens next year when that initial wave of pent-up demand eases and more capacity comes back in. What happens to demand and pricing and that kind of thing then?

Subhas Menon:Well, I don't think that the pent-up demand is going anywhere. I think the pent-up demand has just started. Because, as I said earlier, it's the freedom to travel. I mean, the American Express motto is, don't leave home without it. But during COVID the motto was don't leave home. So people, while they got used to it, it's not what they wanted. And now that they can, I mean, you talk about the 3 biggest travel segments, it's business, which includes MICE and everything, there's visiting friends and relatives, and there's leisure. Maybe leisure would probably be affected by economic conditions. But business and visiting friends and relatives, they are not going to give up their chance to be able to make those socioeconomic connections, traveling to be in front of their corporate clients, their suppliers, for VFR to attend weddings, to meet up with their friends and families, which they were able to do before. That's not going to change. So the pent-up demand will be there, will continue well into 2023, I'm sure. And even beyond that, you know, and some of the issues that we face today economically are actually man-made or government-made, as you can see, you know, the war in Ukraine, you know, China closing its borders, you know. So these things, you know, can be corrected, you know, with, you know, willful effort, you know. So I would say that the prognosis for air travel demand is still very strong.

Adrian Schofield:Anyone else want to talk about that, how that demand-supply imbalance might change next year?

Alexander Lao:I'd agree with that. I think demand's still going to be strong. What we will see though is a lot more airlines coming back. So like airlines like Cathay Pacific in Hong Kong, the airlines in China are going to come back, and that'll put a lot of pressure on actually pricing. I mean, today we're seeing, in fact, we're seeing the same on longer sectors. We're seeing a lot of record pricing levels which we've not seen In some time, so a lot more competition is going to come in. That'll drive some of the pricing pressure downwards. Now I think if the if and when the economic downturn does happen, there are some risks to the travel industry. So clearly, I think it'll be it'll be beneficial for airlines, airports, and other associated industries to make sure that we're we're going to be even more efficient. To be even more competitive, to make sure that we're able to compete in such a difficult environment. I think in particular low-cost carriers have proven successful in every economic downturn, and hopefully that will continue to be the case. We'll continue to be able to stimulate demand for VFR, for leisure, etc. But clearly a lot of uncertainty, and when we talk about demand patterns. changing. One of the things we've seen, and we validated this with some of the member airlines that we work with, we've seen the peaks be roughly the same.

Subhas Menon:Yeah.

Alexander Lao:But we've seen the lean and troughs be worse than they were pre-COVID. And whether that's something that'll stay or not is anyone's guess. But clearly, there have been demand pattern changes.

Ching Kiat Lim:Yeah, I agree that for the travel, revenge travel, the trend still seems to have some legs to run for some time based on the forward bookings and the forward flights. I also don't rule out, I think post-pandemic, there could be new trends that are coming up. For example, now in Singapore, many companies, they require the staff to come back 3 days a week and then 2 days work from home. But as we pointed out earlier, the 2 days from home could actually be in Bali.

Alexander Lao:Yeah.

Ching Kiat Lim:It could be elsewhere.

Subhas Menon:It could be anywhere.

Ching Kiat Lim:Taking advantage of a long weekend. So I think these are new trends that come up. Some people I met at conferences also say that during the 2 years of pandemic, they made so many new business contacts on Zoom that now is the time for them to follow up on those contacts and to catch up with them. So there are new trends that are coming up. But I think now it's a good thing is that we are past at least the most critical parts of the pandemic. Airlines, airports, tourism, MTOs, we are getting back to business as And preparing ourselves for the long term and for new routes that need to be marketed. Let's work together to see how to conserve some resources when the demand softens next year. Let's stand ready with more marketing dollars, which I think so far people are still holding back because there's no need to do a lot of marketing at this point when the latent demand is quite strong.

Alexander Lao:Liz, did you want to?

Liz Ortiguera:I'd say that in terms of recovery right now, the industry can take advantage of the fact that the pricing Elasticity is there. I'm hearing reports of business class fares that are 2 to 5 times what they were. And so you can take advantage of that for a certain period, but that's also going to hamper some people from traveling. And so there's this discrete period when you can take advantage of that. So my hope is that we'll see prices normalize more and it'll become— right now, travel is a privilege. You know, for many of us in the room, we were frequent travelers, and right now it's a privilege due to you know the cost, the challenge, you know the health considerations, the the access to to seats. Will it when will it go back to the more of a commodity and more accessible is a big question. But I think the the patterns will certainly change in terms of. You know, as you mentioned, people are enabled now to do longer, more complex itineraries and stay in destinations longer. And frankly, the governments want that. So I think the way it will recover will be very different.

Alexander Lao:Great.

Adrian Schofield:Thank you very much. I'm afraid to say we are out of time, but what a fascinating discussion that was. I really appreciate you all sort of sharing, being so frank and sharing those insights. I think that was really interesting. So, so thank you all very much for your time and for participating so well.

Subhas Menon:Thank you.

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