Asia Pacific and Middle East take-off: From recovery to global leadership

c: ACI APAC

It has been nearly three years since the commencement of the COVID-19 pandemic, which had profound and enduring effects that reverberated throughout the worldwide populace. Prior to the pandemic’s emergence, Japan experienced a flourishing tourism industry, drawing in 31.8 million foreign visitors in 2019, positioning the nation as a prominent global travel hotspot.

Following a span of two years marked by stringent border regulations, Japan took the step of reinitiating international travel access and officially reopened its borders to global travellers on 11 October 2022.

Climate change

The conference highlighted several insightful takeaways, encompassing climate change challenges, aviation industry dynamics, and crisis management strategies. One theme was the diverse levels of acceptance of climate change across society, particularly evident in the stark contrasts of extreme weather events such as heatwaves, droughts and flooding occurring across different parts of the world.

A significant development discussed at the conference was the participation of 67 Asia Pacific airports in the Airport Carbon Accreditation programme, underlining a growing commitment to curbing carbon emissions within the Asia Pacific aviation sector. Twelve airports in attendance were recognised in the Green Airports Recognition (GAR) Programme for their commitment to their sustainability programmes. The theme for this years’ Programme is the elimination of single-use plastics. Single-use plastic is a concern to the aviation sector given the expected acceleration of growth that the industry will see over the next few years. The recognised airports include those who have gone single-use plastic free, implementing circularity projects and plastic reduction measures.

Price pressures

The emergent rise of the middle class in the Asia Pacific region, projected to burgeon from two billion in 2020 to a staggering 3.5 billion by 2030, carries profound implications for the aviation industry’s future growth trajectory. However, the discourse at the conference unveiled the sluggish recovery post-pandemic in the Asia Pacific region. VINCI Airports CEO, Nicolas Notebaert, articulated this transformation, noting that the region, which previously spearheaded growth, has now become the slowest to recuperate. In contrast, the Middle East recovered much faster, especially the larger hub airports.

Notably, there was an average 30% rise in airfares within the Asia Pacific and Middle Eastern region between Q4 2019 and Q4 2022. However, alarmingly, some markets are seeing air ticket fares increase by up to 50%. Importantly, it was clarified that these fare hikes were unrelated to airport charges – which have remained flat even as inflation has risen to over 10% since 2019, shedding light on airlines capitalising on record profits to recover losses incurred from the pandemic.

The rise in airfares will threaten the long-term recovery of air travel in this region with airlines making the most of low competition and the pent-up demand for travel.

Recovery

Underscoring the importance of recovery, data revealed a pivotal connection between a 10% increase in seat capacity and a 3-3.8% boost in GDP within the Asia Pacific region, as per insights from PwC. To rekindle confidence in travellers, it was underlined that a multi-pronged approach is imperative, encompassing security, safety, health for passengers and staff, a resolute communication that COVID-19 no longer poses a threat, and comprehensive training for employees to adapt to the ‘new normal’.

Due to a significant drop in direct routes, available seats and frequencies of flights, ACI Asia Pacific members made a resolution to promote and restore air routes between Asia Pacific and the Middle East to ensure the socio-economic development of the regions. 

Future preparedness

The conference also delved into the strategies airports can adopt to better navigate health crises. The significance of contractual flexibility was elucidated, exemplified by instances where airport maintenance due to the pandemic-induced shutdown of car parks. However, contractors persisted in demanding owed payments. While previous experience, such as from the SARS virus, provided some lessons, the COVID-19 pandemic exposed the industry’s unpreparedness and misjudgements. The ACI World Airport Health Accreditation was credited as an invaluable tool for airports to reassure passengers of safety measures in place. Despite this, the mental toll on employees was also discussed, with the realisation that the pandemic’s impact on psychological wellbeing has been enduring, with aviation leaders highlighting that an airport’s most important asset is their staff and that they must come first.

An intriguing discussion point was the (often conflicting) opinions airports received during the pandemic, sometimes from individuals unfamiliar with airport operations. The contrasting perspectives of health and airport authorities created tensions, emphasising the need for mediation, integration, and the establishment of a unified operating framework. This pointed to the importance of learning from these experiences and culminated in a framework to guide future airport managers, lest a pandemic should occur again.

Furthermore, the speakers stressed that effective contamination management should be woven into the very fabric of future airport designs. The potential of self-service and facial recognition technology to limit surface contact, thereby negating the need for boarding pass and passport presentations, was underscored.

A unified industry

Though no ‘silver bullet’ solution was identified, the conference called for the establishment of a global unified system and the adoption of touchless technologies. Airport leaders stressed the importance of ‘saving for a rainy day’ and maintaining a sound financial reputation so that airports can go to the financial markets for support when needed. This would cater to the heightened aversion to physical contact during pandemics, offering comfort to travellers and serving as a risk-mitigation measure. The importance of maintaining financial stability and reputation, as well as valuing and safeguarding staff wellbeing, was reiterated.

In conclusion, the conference provided a comprehensive panorama and revealed the intricate interplay between climate change, aviation industry economics, and crisis management. The lessons imparted underscored the necessity for holistic, adaptable approaches that encompass environmental, operational, and human considerations.