ASIA PACIFIC. A new quarterly report from Airports Council International Asia-Pacific (ACI APAC) shows encouraging signs of recovery in the regional air travel market, with capacity rebuilding and domestic traffic in particular growing sharply in Q1 2022.
The regional arm of ACI hailed the ‘green shoots of recovery’ across the Asia Pacific and Middle East aviation industry in the first edition of the Airport Industry Outlook.
The report, developed in partnership with Mott MacDonald — a global engineering, management and development consultancy— provides a snapshot of how airports in the region have performed during the period from January to March.
Although domestic passenger traffic has climbed with the easing of restrictions within some countries, international traffic – the key revenue driver for airports in terms of passengers’ commercial spend – has remained largely stagnant. This is due to continuing restrictions alongside geopolitical tensions in and around the region, said ACI APAC.
Considering airline seat capacity as a proxy to measure the flow of passengers, compared to Q1 2019 data, domestic traffic has made a recovery of 92% of pre-pandemic levels. But international seat capacity was still down -67% during Q1 as travel restrictions, quarantine and testing requirements continued to hamper the growth of air travel.
Domestic seat capacity is expected to exceeded 2019 by +4% in Q2 2022. This is driven largely by Emerging East Asia (notably China), which has +15% more departing seats scheduled in 2022 than in 2019. Middle East domestic capacity remains below 2019 levels.
In contrast, total international seat capacity in 2022 is -49% below 2019 levels, with significant variation between sub-regions. South Asia and the Middle East are only down about -15% on 2019 levels, while Emerging East Asia (China, Mongolia, Democratic People’s Republic of Korea) is still down by -81%, and is once again experiencing stringent travel restrictions, noted ACI APAC.
Boosted by high rates of vaccination (70% or above in the six largest aviation markets), since early 2022, many countries have been easing entry requirements, but parts of Emerging and Developed East Asia (Japan, Republic of Korea, Chinese Taipei, Hong Kong, Macau, China, Mongolia and Democratic People’s Republic of Korea) have kept quarantine requirements in place. In Asia Pacific and Middle East, currently 20 countries have no significant entry restrictions.
Impact on profitability
EBITDA and net profit margins, based on a selection of sampled airports, indicates improving conditions in Q4 2021 (October to December), driven by an increase in passenger traffic and optimisation of operating costs. However, said ACI, “margins remained far below pre-pandemic levels and are economically unsustainable”.
Quarterly revenues remain -58% below the same period a year earlier. Although revenues are improving slowly with traffic recovery, they remain at low levels, leading to large operating losses for airports. Total operating expenditures have declined since the start of the pandemic, though the decline has halved in percentage terms in Q4 2021 compared to the same quarter in the previous year.
Overall satisfaction scores for airports have increased continuously throughout the pandemic up to Q4 2021, noted the association. Scores were around +5% higher compared to the same period in 2019. Similarly, Middle East performance is also above 2019 levels.
ACI Asia-Pacific Director General Stefano Baronci said: “Analysis shows that travel restrictions have to a large degree failed to prevent the spread of COVID-19 mainly due to the high infectious nature of the Omicron variant and have turned out to be a deterrent for the recovery of aviation, impacting the economy of the region.
“Cargo business proves on the contrary the leading role that Asia Pacific plays in the global economy. Despite an improving trend, airport financial margins remained far below pre-pandemic levels and are economically unsustainable.
“It is therefore time to remove ineffective restrictions and enable nations to accelerate their economic growth. To achieve a truly sustainable recovery from the slump caused by COVID-19, cooperation and the establishment of standards that harmonise the processes for international travel between states are crucial. The global recovery will only be realised with the escalation of vaccination campaigns, development of digital health passes, and supportive policies from governments.”
Note: The Trinity Forum – the world’s leading airport commercial revenues conference – is to make a welcome in-person return on 1-2 November 2022 with Changi Airport Group as host.
The event, created by The Moodie Davitt Report in 2003 and now co-organised with Airports Council International (ACI) World and ACI Asia-Pacific, has been suspended for the past two years due to the global pandemic.
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