Asia-Pacific aviation: Travel bubbles have been slow to take off in the region, but may still provide the best way forward

19 May, 2021

The Asia-Pacific region was initially hit hard by the COVID-19 pandemic, probably more so than any other of the world's regions. But some of the key Asia-Pacific markets have also recovered more quickly than those in other parts of the world.

While borders generally remain closed, or are subject to quarantine restrictions that have a similar effect on travel, there have been some so-called green lanes established for essential travel, but in general the hoped-for travel bubbles have been slow to develop.

Worryingly, recent weeks have seen increased waves of the virus resurfacing in countries who had believed to have COVID-19 under control. This return however is not unexpected and has emphasised the need for practical, data-driven steps to opening up in a safe means.

We are already seeing in other parts of the world that the rapid deployment of vaccines is a very important component for the sector's recovery, but the aviation industry simply cannot afford to wait until they become available worldwide.

The key now will be to what extent - and how quickly - governments relax international travel restrictions once vaccinations reach critical mass in their populations. Travel corridors between countries may still be necessary, and these will probably precede blanket removal of travel restrictions and quarantine rules. Initiatives such as digital medical passports will be important in allowing cross-border travel to resume.

There are still too many unknowns related to the post-COVID recovery to make ironclad predictions. The industry will have to wait and see what sort of permanent shifts have occurred in business travel, how quickly economies bounce back, and how demand for international vacations recovers.

The growing acceptance of online and virtual meetings could mean some structural change for business travel demand. It won't disappear, but it may moderate compared to pre-COVID levels. Leisure travel demand will depend partly on economic conditions in each country, and how confident people are in their job security.

Another factor will be the extent to which tourism infrastructure has suffered during the pandemic in popular international leisure destinations, where there are many such examples across the Asia Pacific region.

Speaking at the May-2020 edition of CAPA Live, Association of Asia Pacific Airlines (AAPA) director general Subhas Menon explained that restrictions and border closures in Asia have been and remain 'much higher' than anywhere else.

"The level of restrictions and border closures is much higher in Asia than anywhere else… The vaccine deployment with the exception of Singapore, is below 10% even in Australia, so the mood is a bit more despondent…It looks like countries that are able to control or eradicate the virus are in no rush to reopen their borders, meanwhile the debt burden is also increasing for the airlines, so they will require a lot of help from government to stay in the game," he said.

During the session Mr Menon and Pacific Asia Travel Association (PATA) CEO Mario Hardy discussed in greater detail travel restrictions and vaccine developments in the Asia Pacific region, as well as the outlook for international travel going forward.

Mr Hardy acknowledged international travel intent "is still there and it will happen, but it won't happen in the timeline that people expected it would as goals were too ambitious". He added: "When it comes to regions where only a fraction of the population have been vaccinated, it will take a much longer period for them to reopen", noting: "I don't want to sound too pessimistic but 2022 looks more promising to me".

Initially, airlines operating mainly narrowbodies on domestic routes will have an advantage, because domestic networks are rebounding much faster. This gives these airlines a revenue flow (even if reduced) while international remains stagnant.

As CAPA - Centre for Aviation highlighted in an analysis piece earlier this year, airlines such as Cathay Pacific and Singapore Airlines, which rely exclusively on international traffic, are likely to be slowest to recover as they have no domestic networks or feed. And they also tend to rely on the transit hub model more than other airlines, a model which needs a critical mass of connecting routes for optimal efficiency.

The report 'Asia-Pacific airlines' 10 big questions a year into COVID slump' also noted that in Asia, LCCs are also likely to have an advantage in the post-COVID environment. Leisure travel is expected to recover more quickly than business or premium, and most LCCs are based on narrowbody aircraft for their international networks. Short haul international travel within the Asian region is likely to return faster than long haul intercontinental flights, which again would suit the LCC networks better.

You can view a recording of the full CAPA Live session below, where AAPA's Subhas Menon and PATA's Mario Hardy share their thoughts on how markets are performing across the Asia-Pacific; the practical, data-driven steps each country should take to opening up; the effectiveness of bilateral corridors; and if governments are investing enough in technology, processes and infrastructure.

https://vimeo.com/547321551