Despite a slow start to recovery when compared to other regions, preliminary traffic figures released by the Association of Asia-Pacific Airlines (AAPA) highlighted that international air travel has only continued rebounding last month. The growth was powered by pent-up demand, even as bouts of recession have hit certain parts of the globe.
A doubled load factor in October
Within the last month alone, airlines within the Asia-Pacific region transported a significant total of 12.1 million international passengers, which signified an eight-fold increase compared to the 1.4 million passengers carried in the same month last year. Measured in revenue passenger kilometers (RPK), demand surged by 604.7% year-on-year, outpacing the 194.3% expansion in available seat capacity.
As a result, October’s average international load factor doubled to 77.7%. However, the restrictions of specific regional markets resulted in passenger traffic volumes falling short at just 38.6% of pre-pandemic levels. While the appetite for international travel is at its highest point since the pandemic’s start, sizeable headwinds such as continued quarantine requirements in some countries and rising inflationary pressures prevent the Asia-Pacific from recovering much quicker.
Regardless, the regional aviation industry’s recovery is still smooth-sailing and will likely continue in this steady trend as Asia-Pacific airlines feed the growing demand. Commenting on the results, Subhas Menon, AAPA Director General, highlighted:
“The lifting of travel restrictions in North East Asia in October 2022 was welcomed by the traveling public and the region’s airlines which saw substantial improvements to load factors. Overall, during the first ten months of the year, the combined 74 million international passengers carried by Asian airlines represented a 472% increase compared to the previous corresponding period.”
A downhill demand for cargo
While the passenger demand for international air travel continues to surge, the demand for international air cargo fails to be on par as it continues to falter significantly. The decline was approximately 13.9% year-on-year in freight tonne-kilometers (FTK) due to depressed business and consumer confidence levels, which eventually resulted in the downturn for export markets for intermediate goods.
And similar to the headwinds affecting commercial air travel, the international air cargo market is also affected by high fuel prices, ongoing global conflicts, and prolonged restrictions in certain Asian-Pacific countries. Canceled cargo flights in these countries have caused airfreight rates to see a short-lived price increase in the first half of October, which also contributed to the offered freight capacity falling marginally by 1.2% year-on-year.
Overall, the average international freight load factor dropped by 9.6 percentage points to settle at just 64.7%. With the Christmas season fast approaching, the weak trend will likely continue without much of a peak season spike. Menon continued by saying:
“By contrast, air cargo markets moderated even more due to multiple headwinds. Declining business confidence, against rising risks to the global economy, led to a slowing in orders for manufactured goods, driving a 5.5% year-on-year decline in air cargo demand for the first ten months of the year.”
Bottom line
Even as the region faces a challenging operating environment of weakened local currencies and staffing shortages, the overall outlook for commercial air travel remains positive toward the year-end. Another forecast was that the Asia-Pacific could eventually account for at least 58% of global air passenger demand by 2040, although the lengthy timeline is partially due to not knowing when China will fully reconnect to the world.
As for the air cargo market outlook, rates and volumes will likely continue dropping into the peak Christmas season, which might leave air cargo carriers in temporary limbo. However, if inventories become sufficiently low enough and consumer demand strengthens, a late-season spike could happen, but it probably won’t hold for very long.
Source: simpleflying.com