KUALA LUMPUR: The airline industry in Asia Pacific is poised for a continued recovery phase in 2023 before entering the growth stage starting second-half of 2024 that would bring the sector back to its pre-pandemic glory.
The Association of Asia Pacific Airlines (AAPA) director general, Subhas Menon said the pent-up demand for air travel would drive the industry back to growth and profitability in the upcoming years.
"People's passion for travel isn't subsiding. It's just that they couldn't (during the global lockdown due to Covid-19 pandemic). When borders reopened, they came back with a vengeance and travel started to boom and recover."
"Everybody said this (air travel demand) isn't going to last long. But it lasted all of 2022 and it's still looking very strong," Subhas told the New Straits Times in an interview recently.
According to AAPA, the number of passengers carried by Asia Pacific airlines in January 2023 rose to 52.1 per cent from the pre-pandemic traffic levels in 2019.
The industry's recovery provides an opportunity for airlines in the region to gradually build up their fleet capacity and manpower to come with the demand without facing disruptions similar to what the United Kingdom and Europe faced in summer last year.
"The pent-up demand is higher than the number of flights that have been introduced. So, airlines are struggling to put back all the flights that they had in 2019 for various reasons," Subhas said.
One of the major reasons is that most airlines in Asia Pacific need time to recruit manpower and continuously train the employees as airlines have lost a quite a number of staff during the pandemic.
"Many people left the industry during Covid-19. Nobody could fiddle their thumbs for two years. So, they looked for other jobs."
"And you could say that some of them are once bitten twice shy. They don't want to come back to the same industry," Subhas said.
Returning stored aircraft back to operations after years of being parked at the dessert and undergoing heavy maintenance checks also contribute to the struggle that airlines are facing.
Commenting on high airfares, Subhas said the prices are mainly caused by the disruption of current supply chain due to geo-political tensions globally, inflation and higher jet fuel cost.
"Airfares being high does help the airlines because of the huge increase in operational costs…We're still relying on pent-up demand to keep us going but at some point, the fares will start coming down," he added.
The transition to sustainable aviation fuel (SAF) usage is also causing the hike in prices as airlines in Asia Pacific had committed to achieve net zero carbon emissions by 2050.
Jet fuel accounts between 25 per cent and 30 per cent of any airline's operating costs.
According to the International Air Transport Association (IATA), jet fuel prices reached a record-high of US$172 (RM762) a barrel last June.
SAF typically costs about two and a half times the price of jet fuel.
Subhas said it's important for airlines in the region to encourage more fuel suppliers to make the transition to SAF so that the price could be brought down when supply matches the demand.
"We need the fuel suppliers to ramp up supply and then the prices will come down and the airlines will be able to operate sustainably. Governments will also have to play their part in terms of policy as well as investments and subsidies to ramp up the production of SAF."
"This is what the airline industry is advocating for governments and fuel suppliers to come into the act and address the supply side of the equation," he said.