(Bloomberg Opinion) -- Asian travelers don’t seem ready to return to the skies. If there’s any hope for the region’s airlines, it’s that this summer season spurs families and new flyers to spread their wings both locally and across the oceans.
Data from carriers and industry bodies show strong growth and solid load factors, indications that the extra capacity being added to routes is finding a market among passengers willing to book a seat. These numbers are misleading. What we’re seeing is an industry shaking off the remnants of the Covid-19 pandemic but without a sustained appetite for air travel.
Take the most recent figures. The number of travelers carried so far this year is up 45% from last year, according to data from the Association of Asia Pacific Airlines, whose members include Singapore Airlines Ltd., Cathay Pacific Airways Ltd., Japan Airlines Co. and Taiwan’s China Airlines Ltd. Actual miles flown climbed 40%, and load factor — the ratio of available capacity actually used — inched up to 80.9%. Any executive or economist would be satisfied with such growth.
But the reset brought by Covid set the bar low. If you compare recent data to the trickle of activity the aviation sector experienced in 2020 through 2022, May’s 28 million passengers flying 100.1 billion miles ought to be celebrated.
Unfortunately, so far this year we’re still 13% below the levels seen in 2019. Prior to Covid, the universe of AAPA members regularly clocked up at least 25 million flyers and total distance surpassing 100 billion miles per month. Including the most recent figures, the industry has breached that 100 billion mile mark only three times since February 2020. What’s more, May data shows that growth is decelerating.
Strained US-China ties have slashed the need and interest on either side to take work or leisure trips across the Pacific. There’s not a lot of scope for this to improve given that tensions are unlikely to ease anytime soon. China’s weaker economy has spurred consumers to tighten their belts, while increased national pride is inspiring travelers to take trips domestically. The country’s spreading and improving rail network means most tourists needn’t hop on a plane to travel great distances.
There could also be structural changes within the business-travel market that limit upside potential. “Due to increased workplace flexibility and changes in corporate travel policies — including an increased commitment to carbon footprint reduction — a permanent reduction in business travel growth is predicted,” the Asian Development Bank warned in a report on the Southeast Asian aviation sector.
The new trend will be for fewer work trips, but of longer duration, the Manila-based agency believes. If that’s the case, hotels and upscale restaurants may fare better than airlines. There’s also a trend toward “bleisure travel,” where business itineraries are extended to include leisure activities. That’s also good for hoteliers, but bad for carriers.
There’s one final trend that doesn’t augur well. The average distance flown per journey has declined around 5% from an equivalent period five years ago. That’s a function of travelers taking fewer long-distance journeys, which are more lucrative and less price-sensitive, and instead sticking closer to home.
If there’s to be a real turnaround, it’s likely to be in the summer months as schools go on break and people take annual vacations. While tourist hot spots, from Japan to Indonesia, show renewed buzz, and the Paris Olympic Games will see more trips from Asia to Europe, the data still indicates we remain well below prior levels. Families looking to take holidays in Europe, North America or Australia will be the key to carriers’ hopes that long-distance travel is back. Short journeys within the region are also needed. But we shouldn’t bet on a return to the pre-Covid peak happening this year because of increasing challenges such as hiring staff and getting planes back in service.
The most likely way to eke out growth will be for airlines to attract new or infrequent flyers. Rewards programs for regular travelers may not cut it because many already know whether they want to fly. Low-price airfares are one measure, but offering a reason to jump on a plane is another. That’s where tourism bureaus and travel agents can play a part. Unfortunately, in a world where citizens are becoming more inward looking, many seem a bit too content to just stay at home.
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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tim Culpan is a former Bloomberg Opinion columnist covering technology in Asia. Previously, he was a technology reporter for Bloomberg News.
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