Asia-Pacific Execs Concur Aviation Industry Must Rebuild Before China’s Return

While Asia-Pacific airlines need China to reopen in order to reach full recovery, there are also plenty of other priorities to address in the interim, industry experts say.

Massive growth in outbound and inbound travel made China a vital market for many of the region’s airlines before the pandemic. However, traffic flows to and from Mainland China remain at skeleton levels due to strict COVID-19 travel policies.

There are not yet any firm signs of when China’s border restrictions will begin to ease, according to a panel of senior aviation figures at CAPA’s Asia Aviation Summit held in Singapore Nov. 3-4.

China currently represents “the elephant that isn’t in the room” for the airline industry, said Subhas Menon, director general of the Association of Asia Pacific Airlines. China-related traffic accounted for as much as 40% of the pre-pandemic Asia-Pacific total, including domestic and international, Menon said.

The China market is extremely important to the Philippines, said Alexander Lao, chief commercial officer for Cebu Pacific. Mainland China was the Philippines’ second-largest source of tourists before the pandemic and was on pace to be number one, Lao said.

Moves by China to “double-down” on its zero-COVID policy have reduced optimism it will reopen soon, Lao said. “Ultimately, the question for airlines [is] if China doesn’t reopen [in the short term], are there going to be other new markets or sources of customers?”

It is still “anyone’s guess” when China will reopen, agreed Lim Ching Kiat, managing director for air hub development at Singapore’s Changi Airport Group. However, this does not necessarily matter for now, he said. “In the near term, our work is cut out for us,” Lim said, referring to rebuilding other markets and routes after the pandemic. “There’s more than enough work for us to do while waiting for China to open.”

As one example, Southeast Asian leisure destinations need to lure back European tourists that increasingly turned to Caribbean and Latin American destinations while many Asian countries were closed during the pandemic, Lim said.

The eventual return of Chinese traffic will put more pressure on an aviation system that is already under strain keeping up with international travel recovery, panel members said.

Lao noted there are bottlenecks in many places at the moment, “and that’s even before China comes back.” He questioned whether there are enough ground-handling workers and resources at some airports to handle the potential increase in Chinese traffic.

It is likely that when China does reopen for international travel, it will do so in a phased manner, said Liz Ortiguera, CEO of the Pacific Asia Travel Association. A gradual opening of this type “would actually be good for the [travel] industry,” she said. 

Ortiguera cited one hotel executive, who told her, “Thank goodness China didn’t open up at the same time as [other markets],” as the travel industry is facing staffing shortages in many countries.

“Now is the time we need to prepare for when [China] does open up and make sure we have that [capacity ready],” Ortiguera said.