East Asia slows recovery at region’s airports

October 1st 2022

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For Asian airlines desperate to see one of their key markets, China, reopen after a long pandemic winter of restrictions, 2023 should deliver some relief. Read More » According to a leading regional aviation analyst, the Mainland could begin easing its lengthy ban on international arrivals in four months.

“I am hearing – obviously this is information from contacts in Mainland China – China is looking at the Lunar New Year holiday early next year [to ease entry restrictions]. The Year of the Rabbit starts on January 23,” founder of Malaysia-based Endau Analytics, Shukor Yusuf, said.

“The opening will be gradual, incremental. Not letting all the horses out at once. That would cause huge logistical difficulties for many Asian countries.”

Speaking earlier this month at an OAG webinar organized by the provider of digital flight information, intelligence and analytics for airports, airlines and travel tech companies, Yusof said there will be pent-up demand for travel from middle class Chinese, whose numbers have not shrunk despite almost three years of the pandemic.

“These are people who have stashed away a lot of disposable income away in the past two-and-a-half years. They will want to be travelling somewhere and spending,” he said.

Chinese airlines will be better placed than their regional rivals to benefit from eased restrictions because of two factors: they kept flying during the pandemic and they did not shed staff.

OAG chief analyst, John Grant, said “there are lots of small steps that are going to help recovery. But until China reopens, the region is going to lag behind the rest of the world because it is China dependent.”

The OAG presentation revealed the world’s 50 global megahubs table had been radically reshaped by the pandemic with Asian hubs in particular operating at a fraction of pre-crisis levels.

Delhi’s Indira Gandhi International Airport is the highest ranked airport outside the Americas, at 13 in the top 50 listings, with Tokyo Haneda International Airport at 14, Bangkok’s Suvarnabhumi Airport (34 from 14 in 2019), Kuala Lumpur (39 from 12 in 2019) and Singapore Changi (48 from nine in 2019). Hong Kong International Airport, which was ranked at 10 pre-pandemic, has dropped out of the top 50 list altogether as has Shanghai, formerly at 25 in the table.

In 2022, 11 of the top 12 airport hubs were in the U.S. American hub domination represents a unique snapshot of pandemic times because it was a less restricted market relative to elsewhere.

However, Grant said reports Asian hubs are badly diminished long-term were premature. “It might be longer than a year. It might take two years. It could even take three years. But the fundamentals of geography and the base carriers these particular airports have will return them to the positions they occupied in 2019,” he said.

“If you take Hong Kong as an example, its access to China is the best. It was and will be the gateway to China. Initially, Cathay Pacific will operate lower frequencies to long-haul destinations but it will return to five a day to Heathrow. It will be back to three daily to Los Angeles or whatever it has to be.

“It will take time to build out. It might not happen quickly. In some cases, airlines may be forced to move slightly quicker than they might prefer to protect slots at hubs like Heathrow because the use it or lose it rule will kick in unless they can lend excess slots to other airlines short-term.

“Already we are seeing it. Despite all that has happened the airports that were big airports and the airlines that were big airlines are coming back to prominence. The list of the top 20 airlines has a much more normal feel and size to it. Same for the airports. Normality is being restored.”

Ultimately, Grant said, “the elephant in the room” for Hong Kong and China is the inability of European carriers to fly through Russian airspace, an issue that will continue for some time.

“Some European carriers will not be that bothered about it because the market is in a recovery phase and they will have found other ways to use their fleets. It is interesting to note British Airways is returning to Haneda and Hong Kong from mid-November. It will take more circuitous routings to make these journeys.

“Until the Russian overflight issue is resolved, the only net winner will be Cathay Pacific and the Chinese airlines – when they reopen - because European carriers will have to avoid that space.”

As recovery gains momentum for Asian hubs and their airlines, there may well be new opportunities. The closure of India and China has had a huge impact on the region, Yusof said, but the losses are being partially compensated by an influx of visitors from the Middle East and even Central Asia, Yusof said.

“We are still seeing Russians, I am told, in some parts of Malaysia.”

It is quite sad because it is people walking across the borders from Russia into Uzbekistan, Turkmenistan, Kyrgyzstan and Kazakhstan and then flying to the UAE. Equally, it seems to be a market with a lot of activity, Grant said.

“Turkish airlines have nearly doubled their capacity into Central Asia in the last 18 months. Destinations we probably did not know are appearing on network maps with connecting traffic to the U.S. and Europe.”