Southeast Asia is witnessing a surge in air travel demand as the region recovers from the Covid-19 pandemic and eases travel restrictions. The aviation sector is banking on the boom to revive its fortunes and expand its market share.
Airlines Ramp Up Capacity and Routes
Several airlines in Southeast Asia have announced plans to increase their capacity and routes in response to the growing demand for air travel. For example, Singapore Airlines said it would operate at 50% of its pre-pandemic capacity by April 2023, up from 38% in November 2022. The carrier also added new destinations such as Cape Town, Istanbul, and Maldives to its network.
Similarly, Vietnam Airlines said it would resume flights to Japan, South Korea, and Australia in December 2022, after suspending them for more than a year due to the pandemic. The airline also launched new domestic routes to boost its revenue and market share.
Other airlines that have increased their capacity and routes include AirAsia, Philippine Airlines, Thai Airways, and Malaysia Airlines . These airlines are hoping to capture the pent-up demand for leisure and business travel, as well as the seasonal traffic during the holidays.
Travel Bubble and Vaccine Passport Boost Confidence
One of the key factors that have contributed to the aviation boom in Southeast Asia is the establishment of travel bubble arrangements and vaccine passport schemes among some countries in the region. These initiatives allow vaccinated travelers to bypass quarantine and testing requirements, making travel more convenient and attractive.
For instance, Singapore and Hong Kong launched their long-awaited travel bubble on November 22, 2022, after several delays due to Covid-19 outbreaks. The travel bubble allows travelers from both cities to fly without quarantine, as long as they test negative for Covid-19 before departure and upon arrival. The travel bubble has boosted the demand for flights between the two cities, with Singapore Airlines and Cathay Pacific reporting strong bookings.
Another example is the ASEAN Vaccine Passport, which was endorsed by the leaders of the 10-member Association of Southeast Asian Nations (ASEAN) at their summit in October 2022. The vaccine passport is expected to facilitate cross-border travel and trade within the region, as well as with other countries that recognize it. The vaccine passport is also seen as a way to revive the tourism industry, which has been severely hit by the pandemic.
Challenges and Opportunities Ahead
Despite the positive signs, the aviation sector in Southeast Asia still faces many challenges and uncertainties ahead. The Covid-19 situation remains fluid and unpredictable, and any resurgence of cases or new variants could derail the recovery process. The travel bubble and vaccine passport schemes are also subject to review and adjustment, depending on the health and safety conditions of the participating countries.
Moreover, the aviation sector in Southeast Asia is highly competitive and fragmented, with many players vying for a slice of the market. The pandemic has also accelerated the consolidation and restructuring of the industry, with some airlines merging, downsizing, or exiting the market. For example, Nok Air and Thai Vietjet announced their merger in November 2022, creating the largest low-cost carrier in Thailand. On the other hand, Lion Air and Batik Air decided to cease their operations in Malaysia in October 2022, citing low demand and high costs.
However, the aviation sector in Southeast Asia also has many opportunities and potential to grow and thrive in the post-pandemic era. The region has a large and young population, a rising middle class, and a growing digital economy, all of which create a strong demand for air travel and connectivity. The region also has a diverse and rich cultural and natural heritage, which attracts tourists from around the world. The aviation sector can leverage these advantages to offer innovative and affordable products and services to its customers, as well as to collaborate and cooperate with other stakeholders in the industry.
