This article first appeared in The Edge Malaysia Weekly on February 21, 2022 - February 27, 2022

WHILE news that a slew of countries in Asia-Pacific are set to reopen their doors to foreigners come as a welcome relief to the pandemic-battered airline industry, a full recovery in international travel is not anticipated until major tourism markets — China, India and Indonesia — open their borders, say aviation experts. The region has the strictest pandemic-related border controls in the world.

“The fact that the borders of China and India, which are big tourism exporters and importers, remain closed is a bit concerning. For meaningful recovery to take place, we need their borders to open up,” Association of Asia-Pacific Airlines (AAPA) director-general Subhas Menon tells The Edge in a telephone interview.

China closed its borders to nearly all travellers in March 2020 and reportedly is expected to remain closed for most of 2022. Last December, India postponed a plan to resume international flights following the emergence of the Omicron variant of Covid-19. Apart from the island of Bali, international borders remain mostly closed in Indonesia.

Menon says the industry in Asia-Pacific is in a “dire” state, pointing to the number of international passengers carried by the region’s airlines last year, which represented just 23% of the volumes recorded in 2020.

“International passenger traffic last year was worse than in 2020, which was already bad compared with 2019. This was mainly due to governments imposing travel bans and restrictions because of the Delta variant of Covid-19,” he adds.

AAPA’s more recent air traffic results show Asia-Pacific airlines carried 16.7 million international passengers in 2021, which were just 4.4% of the volumes recorded in pre-pandemic 2019. “In contrast, the number of international passengers carried by airlines in other regions represented about 35% to 40% of the volumes recorded in 2019,” says Menon.

Mayur Patel, regional sales director at global travel data provider OAG Aviation, concurs. “International borders remain closed in key markets such as China, Hong Kong, Taiwan and Japan. Until they reopen, the whole of Asia-Pacific will be lagging behind in terms of inbound tourism into Southeast Asia,” he points out.

“In terms of the impact that it will have on carriers, especially when most visitors to the region do multiple-country hopping and with some countries being closed [to foreign tourists], that puts a lot of obstacles on some of the low-cost carriers that are reliant on these travellers to move around different countries,” he said at the OAG webinar last week on “From Zero to Hero: Successful network experimentation by airlines through Covid-19”, where he was one of the panellists.

Like the International Air Transport Association (IATA), AAPA expects air travel to only return to pre-Covid-19 levels in 2024. This would be in line with the target that about 100% of the population in Asia-Pacific would be fully vaccinated by end-2023, says Menon.

Still, he expects domestic travel in the region to rebound faster than international travel to pre-pandemic levels by this year. He concedes that the spread of the Omicron variant has foiled hopes of a fast recovery as governments reimpose strict border measures and delay border reopenings.

“Many countries in the region have seen a surge in Omicron infections — even more than previous variants of the virus. However, new Covid-19 hospitalisation rates and new ICU admissions have been low and so, governments are beginning to feel that their health systems can cope and they are putting their border reopening strategies back on track,” says Menon.

“I wouldn’t say it is the same everywhere. But as more countries lift Covid-19 curbs, others will follow suit.

“And when we talk about reopening, what we want is borders to reopen to travellers without the need for quarantine, and hopefully even without testing for fully vaccinated people. If you really think about it, Omicron is being driven by community infection, not international travel. We don’t test to go into a shopping centre, so taking an international flight shouldn’t be any different.”

In a statement last Thursday, IATA director-general Willie Walsh said governments should put a stop to the singling out of the travelling population for special measures. “In nearly all cases, travellers don’t bring any more risk to a market than is already there. Many governments have recognised this already and removed restrictions. Many more need to follow.”

Travel between countries during the pandemic has been problematic with governments having different rules, restrictions and testing requirements to deal with Covid-19. In this regard, Menon calls on governments to streamline travel requirements across countries rather than having all countries introduce their own Covid-19 protocols.

On its part, IATA has developed a mobile app that enables airlines, governments and other organisations to instantly verify a traveller’s travel and health documents, such as Covid-19 test results and vaccination certificates, in a secure and privacy-preserving manner.

“The IATA Travel Pass is definitely a working device. But you need a few things for it to be effective. One is interoperability. The travel pass, which already works well with the airline and airport systems, must also integrate with government systems such as the health and immigration agencies,” he says.

As of October 2021, seven airlines — Emirates, Etihad Airways, Jazeera Airways, Jetstar, Qantas, Qatar Airways and Royal Jordanian – have reportedly announced plans to implement the travel pass while another 50, including Malaysia Airlines Bhd, are in the trial phase.

Citing Covid-19 protocols for airlines in Asean, Shukor Yusof, founder and analyst at aviation consultancy Endau Analytics, points out that the rules are different across the region.

“It is funny when there is already an open skies agreement among the 10 member countries of Asean, but what we have seen in the past two years is the failure in leadership of member countries to get together to streamline or make things easier for people to move around,” says Shukor, who was also a panellist at the OAG webinar.

“Given its archipelagic geography, travelling is very much dependent on carriers. But that is not happening and the governments vary from one to another in terms of implementing healthcare protocols. There is unwillingness among certain member countries to accept each other’s standards of health protocols. That is where we have a distinct lack of cooperation in this part of the world.”

Business aviation sees faster rebound than commercial airlines

The business jet industry, meanwhile, has been quicker to recover from the pandemic than commercial airlines.

Carlos Brana, executive vice-president of civil aircraft for French aircraft manufacturer Dassault Aviation SA, recalls that the business jet market was significantly affected in 2020 due to, among others, the lack of visibility in business from buyers.

“A lot of them, because of the crisis, couldn’t see how they could invest in a business jet not knowing what the future would be. But in late 2020, we saw signs of improvement [in demand for business jets] in some countries, with China being the first,” he tells The Edge in a virtual interview.

“And last year, we saw a recovery in the US market. Customers started to place orders for aircraft that were previously deferred in 2020. They had the ability to purchase again because they regained visibility on their business. This recovery was followed by markets in Europe and Africa,” he adds, noting that business aircraft manufacturers like Dassault, Bombardier Aviation and Gulfstream performed strongly in 2021.

Dassault reported a significant jump in orders last year, booking orders for 51 Falcons compared with 15 in 2020 when the pandemic took root. In fact, Brana says the company has seen sales recover to 2019 levels.

Brana notes that the pandemic has in some ways also brought a new group of customers — those with the money to fly on business jets but typically flew first class on commercial flights — to the business jet market. “These wealthy customers switched over to the market for business jets with the drastic reduction in the volume of commercial flights,” he says.

“Also, people now want to avoid the health risks of crowded airports and flying with a large number of people on a commercial flight, so they started travelling on business jets. And when you start using business aviation, it is extremely difficult to go back because of the time savings.”

Dassault’s new business jet, the Falcon 6X, is slated to enter service by the end of this year, followed by the Falcon 10X in 2025. The new aircraft are expected to further reinvigorate sales.

The recovery of the business aviation market also spells an opportunity for ExecuJet MRO Services, an aircraft maintenance, repair and overhaul (MRO) firm wholly owned by Dassault, which is building its own 144,000 sq ft maintenance facility at Sultan Abdul Aziz Shah Airport in Subang, Selangor, replacing the 64,000 sq ft of leased facilities that it currently operates. The RM100 million facility, which is slated to be operational by the fourth quarter of 2023, is positioned to support an expanding fleet of Falcon aircraft in Asia, including the latest Falcon 6X and 10X, as well as several Bombardier and Gulfstream aircraft.

“As an aircraft maintenance service provider, so long as there are aircraft ownership and flying activities in the region, we foresee demand for MRO services continuing to be strong,” says Ivan Lim, regional vice-president for Asia at ExecuJet MRO Services.

“While the company has seen a drop in aircraft line maintenance tasks [during the pandemic], scheduled annual maintenance checks continue to be performed. This is why business aviation MRO services are not as badly affected by the pandemic as the commercial aviation MRO business,” he explains.

Lim says business aviation MRO activities are still slightly below 2019 levels “because Asian countries have been a bit more conservative on opening their borders”. “From our perspective, to reach a level where it’s back to business as usual or pre-Covid-19 levels, international borders have to be reopened.

“When is that going to happen? We are hopeful that at least by next year, all the countries will have reopened their borders and there will be no more travel restrictions. We are heading in the right direction with more people getting vaccinated.”

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