Sunday 26 June 2022

Mideast, APAC airports see early signs of recovery: ACI

HONG KONG, May 26, 2022

The Middle East and Asia-Pacific (APAC) aviation industry is experiencing green shoots of recovery, according to the first edition of the Airport Industry Outlook, a quarterly report by Airports Council International Asia-Pacific (ACI APAC).

The report, developed in partnership with global management consultancy Mott MacDonald provides a snapshot of how airports in the region have performed during the first quarter (Q1) of 2022.

Domestic traffic at airports across the Middle East and Asia-Pacific has made a recovery of 92% of pre-pandemic levels, but international seat capacity was still down 67% during Q1 of 2022, a report said.

The total domestic seat capacity is expected to recover to levels exceeding 2019 by Q2 2022 by approximately +4%. This is driven largely by Emerging East Asia (notably China), which has 15% more departing seats scheduled in 2022 than in 2019. Middle East domestic capacity remains below 2019 levels. In contrast, total international seat capacity in 2022 is 49% below 2019 levels, with significant variation between sub-regions.

South Asia and the Middle East are only down about 15% on 2019 levels, while Emerging East Asia (China, Mongolia, Democratic People’s Republic of Korea) is still down by 81%, and is once again experiencing stringent travel restrictions.

“Analysis shows that travel restrictions have to a large degree failed to prevent the spread of Covid-19 mainly due to the high infectious nature of the omicron variant and have turned out to be a deterrent for the recovery of aviation, impacting the economy of the region. Cargo business proves on the contrary the leading role that Asia-Pacific plays in the global economy,” said Stefano Baronci, Director General of ACI Asia-Pacific.  

“Despite an improving trend, airport financial margins remained far below pre-pandemic levels and are economically unsustainable. It is therefore time to remove ineffective restrictions and enable Nations to accelerate their economic growth. To achieve a truly sustainable recovery from the slump caused by Covid-19, co-operation and the establishment of standards that harmonise the processes for international travel between states are crucial. The global recovery will only be realised with the escalation of vaccination campaigns, development of digital health passes, and supportive policies from governments.”
Opening borders & easing restrictions
Boosted by high rates of vaccination (70% or above in the six largest aviation markets), since early 2022, many countries have been easing entry requirements, but parts of Emerging and Developed East Asia (Japan,  Republic of Korea, Chinese Taipei, Hong Kong, Macau, China, Mongolia and Democratic People’s Republic of Korea) have kept quarantine requirements in place. In Asia Pacific and ME, currently 20 countries have no significant entry restrictions.  

China plays a key role in the region as most of South East Asian Airports and Australia are largely dependent on Chinese travellers. The reopening of international air travel to and from China will not only accelerate growth in the region, but also provides a thrust to the industry across the globe.

Passenger traffic performance
While domestic passenger traffic has made considerable progress, with the easing of restrictions within some countries, international traffic, which is the key revenue driver for airports in terms of passengers’ commercial spend, has remained largely stagnant due to restrictions and geopolitical tensions in and around the region.

Robust cargo growth
Cargo growth has proven to be resilient in comparison with passenger traffic, and remains significantly above pre-pandemic levels. As passenger airlines returns providing more belly capacity, air cargo is expected to continue its growth trajectory.

The sub-regions with the largest cargo shares are Developed Asia (Japan, Republic of Korea, Chinese Taipei, Hong Kong, Macau) with 32%, followed by Emerging East Asia with 29% and Middle East 16%.  Developed East Asia was the only region in Q4 2021 that recorded traffic levels above 2019 pre-Covid level. All other regions reported levels around 0.85% or above compared to 2019.

Airport economic performance
The EBITDA and Net profit margins, based on a selection of sampled airports handling 30% of total annual regional traffic volumes in 2030, indicates improving conditions in Q4 2021 (Oct to Dec), driven by an increase in passenger traffic and optimisation of operating costs. However, the margins remained far below pre-pandemic levels and are economically unsustainable.  

Quarterly revenues remain 58% below the same period last year. Although revenues are improving slowly with traffic recovery, they remain at low levels, leading to large operating losses for airports. Total operating expenditures have declined since the start of the pandemic, with the decline having halved in percentage terms in Q4 2021 compared to the same quarter in the previous year.

Airport service quality
Overall satisfaction scores for Airports have increased continuously throughout the pandemic up to Q4 2021, and were around 5% higher compared to the same period in 2019. Similarly, Middle East performance is also above 2019 levels. – TradeArabia News Service


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