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Int’l air travel may return to pre-pandemic levels by 2023, a year earlier than forecast

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The international air travel industry may return to 2019 levels by 2023, sooner than its previous forecast of 2024. THE STRAITS TIMES

Int’l air travel may return to pre-pandemic levels by 2023, a year earlier than forecast

International air travel is likely to return to pre-pandemic levels sooner than expected, with most of Asia opening up quickly and international passenger numbers rebounding to 42 per cent of 2019 levels in the first quarter of this year.

International Air Transport Association (IATA) director-general Willie Walsh said on May 16 that the industry might even hit 2019 levels by 2023, sooner than its previous forecast of 2024.

He said international travel has nearly doubled from the 24.5 per cent last year, and that figures in the first four to five months of this year have exceeded predictions – including by airlines – and are set to keep growing.

This is despite mainland China’s and Hong Kong’s continued Covid-19 restrictions, which he said could lead to shifts in global air network growth towards Southeast Asia and Singapore, allowing the city-state to quickly gain ground on Hong Kong’s pre-pandemic lead.

Walsh was in Singapore ahead of the Changi Aviation Summit, with IATA expected to release a report later this week with revised forecasts.

China’s closure put the brakes on domestic air travel, which only inched up from 72 per cent last year to 76 per cent this year, but this should not be a major concern for airlines, he said.

“Airlines will gradually rebuild in the markets and that’s why I don’t see the Chinese market as a critical issue at this stage. It truly becomes more relevant only as we go through the recovery later. There are a lot of markets that are available to airlines in the region to recover into where there is strong demand,” Walsh said.

Where it matters is airlines possibly adopting a more cautious approach to resuming operations in China and Hong Kong than before, he added.

With airlines currently rebuilding their networks, Singapore’s relatively predictable and open travel policies mean it is in a good position to capture any fallout, said the IATA chief.

“People will be concerned about what they witnessed in China: the speed at which borders were closed, the constant change of the regulations in China and what that meant for airlines,” he added.

“Given the weakness in the balance sheet now, there aren’t many airlines that can take the financial risk associated with a wide-scale expansion into markets that may not be profitable. It’s going to have a big influence on how airlines re-establish and look at the future.”

Walsh said: “Singapore is leading the region in terms of the recovery from border closures. It is a stable environment and the government has worked hard to reassure people that Singapore wants to open again. It has influenced how other countries have looked at the reopening.”

He said last month that Hong Kong was “effectively off the map” due to its Covid-19 curbs, prompting Hong Kong’s Chief Executive Carrie Lam to defend the region’s policy of temporarily banning flight routes that bring in coronavirus cases.

In 2019, Hong Kong was fourth and Singapore seventh in terms of international passenger traffic, but Singapore now has more than four times the number of flights and is connected to nearly thrice as many destinations as its rival, according to May 2022 statistics obtained from aviation data company Cirium.

However, analysts said Hong Kong’s air hub status will not disappear so easily. While Changi Airport and Hong Kong International Airport have similar profiles and have some overlaps in the passengers they cater for, they are not identical.

Sobie Aviation analyst Brendan Sobie said Singapore still relies more on Southeast Asia, Australia and Europe, while Hong Kong traditionally is more connected to mainland China, Taiwan, South Korea and Japan.

Changi Airport and airports in the region have been the beneficiary of some additional capacity by foreign airlines, he added, but Hong Kong, once it is open, should catch up and close the gap.

“Several months ago, one would say Dubai is recovering while Singapore was not. All hubs are at different stages. The longer the current situation continues, the higher the risk there could be a permanent shift.

“There are other airports that could also benefit from any permanent damage to the Hong Kong hub – traffic that would normally go via Hong Kong isn’t simply being diverted to Singapore,” he said.

Head of Asia for OAG Aviation, Mayur Patel, said Hong Kong has retained its top ranking as the world’s busiest cargo hub due to its geographical advantage over Singapore.

“In the medium term, the Southeast Asian hubs will have an advantage, but this will fade once North Asia opens.

“While some of Singapore’s and Hong Kong’s services can easily be substitutable, it would still take a shorter elapse time for those from the Greater Bay Area catchment area, Thailand, the Philippines to fly to the United States from Hong Kong than Singapore,” he said.



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