The recovery of international air capacity in Asia has been largely mixed, with different restart timelines across the region. So which regions are recovering the most and the least? And have you seen any surprises so far?
The analysis looked at 11 markets.
China Taiwan India Indonesia Japan Malaysia Philippines Singapore South Korea Thailand Vietnam
Compared to 2019 levels, India is the most recovered market, with international seat capacity in August 2023 expected to be 4% above 2019 levels. Vietnam is not far behind, at -8% from pre-pandemic levels, Singapore -11%, Indonesia -12% and the Philippines -17%.
Accelerating recovery of Middle East and Asia routes
Looking at India, in terms of seat capacity, it will be interesting to see where major international destinations have seen recovery and where they have not.
Six of India’s top 10 international markets in August 2023 have exceeded their pre-pandemic capacity.
UAE (+8%), Saudi Arabia (+33%), Singapore (+11%), Qatar (+6%), UK (+53%) and Kuwait (+5%).
As you’ve probably noticed, there is a notable trend for Middle Eastern routes to surpass Aug-2019 levels. From India, South East Asian routes (excluding Singapore) seem to have lost some luster. Thailand, which was the second largest international seat capacity from India in Aug-2019, has dropped to fifth place (down 29% from Aug-2019 capacity) and Malaysia, previously in fourth place, has dropped to eighth place (down 36% from pre-pandemic capacity).
The remarkable recovery of Middle Eastern routes is not limited to India. In Indonesia, routes such as Saudi Arabia (+79%), UAE (+10%), and Qatar (+2%) are recovering the most. Much of the growth in Indonesia-Saudi Arabia routes can be attributed to the Muslim population leaving for the Umrah pilgrimage. Saudi Arabia launched e-visa applications for Hajj and Umrah pilgrimages in May 2023, speeding up the process. The Saudi Arabian Tourism Board also plans to open its first office in Jakarta soon.
As for the Philippines, air capacity in the Middle East is expected to exceed 2019 levels, with a recovery of 16% in the UAE and 9% in Qatar.
Strong recovery for China transit hub routes
China, unsurprisingly given its complicated and recent economic reopening, is lagging behind its Asian peers, with international air capacity remaining at just 50% of 2019 levels as of August 2023. However, it is showing a steady increase, up from 13% in January 2022.
Once again, there is a clear trend towards higher recovery on international routes, specifically transit hubs such as the UAE (-13% compared to August 2019), Singapore (-22%) and Hong Kong (-29%). With regard to capacity to these destinations, national flagship carriers account for the majority of the routes.
With Russian airspace still problematic, these hubs would seem to be logical transit points to avoid the issues.
Of the top 10 international destinations by seat capacity from China in August 2023, Japan (-55%), Chinese Taipei (-48%) and Vietnam (-52%) have the lowest recovery levels and were not initially included on the permitted list for Chinese outbound travel groups in February 2023. Vietnam was added in March 2023, Japan was only added in August 2023 and Chinese Taipei is still waiting to be added. However, among international destination routes from China, it is Thailand (-63%) that has the surprisingly low growth rate.
Is Thailand in trouble?
Due to the low recovery rate of air traffic capacity between China and Thailand, Thailand’s international capacity recovery rate is lower than average, at -31% compared to August 2019. In August 2019, China accounted for 24% of Thailand’s total international seats, totalling 2.3 million seats, almost four times the 638,000 seats of Singapore, the second largest international route by capacity.
However, it remains a concern that the recovery of this particular route from China appears to be progressing slowly compared to other Asian destinations, with Thailand also experiencing lower levels of recovery from Japan (-43%) and the latest preferred departure market, India, also lagging behind at -29%.
Thailand’s newly elected Prime Minister, Sretta Tavisin, promised in late August to review visa requirements for travellers from China and India, which he sees as one of the biggest obstacles to recovery, especially after the Tourism Authority of Thailand recently estimated that relaxing visa restrictions could attract an additional 700,000 Chinese tourists in 2023. Golden Week was a can’t-miss opportunity to implement a visa waiver for Chinese travellers, and the Prime Minister personally welcomed the first flight that arrived from Shanghai under the new visa waiver on Monday, September 25.
But a look at flight capacity data reveals the challenges ahead: certainly the easing of visa restrictions could attract more interest, but will there be enough flight capacity to carry the extra passengers to Thailand? Chinese airlines have yet to submit their complete winter schedules, so only time will tell.
Thailand also faces challenges in its inbound tourism industry when it comes to Japan, which was second in air transport capacity in August 2019 but has fallen to seventh place by August 2023. Thailand is understandably concerned about the potential tourism shortfall between the two countries. In the first seven months of 2023, 547,000 Thais visited Japan, while only 393,000 Japanese travelers visited Thailand.
All Nippon Airways’ new low-cost carrier, Air Japan, has announced it will begin serving Bangkok from February 2024. But the airline’s president said 70% of its passengers are Thai and only 30% are Japanese, meaning the deficit is likely to continue.
Thailand’s goal of 29 million total international visitors may seem achievable, considering that the country was at 17.6 million as of August 29. But can it surpass that limit and continue to meet its target of 30-35 million in 2024?
Will Thailand’s loss be Vietnam’s gain?
While Thailand has struggled to recover to pre-pandemic air capacity, Vietnam, in contrast, has seen impressive recoveries, with Japan at +13%, Taiwan at +14%, Australia at +71% and India growing from zero seats in August 2019 to 118,000 seats by August 2023. Indonesia, which is not in Vietnam’s top 10 for international seats, has recorded growth of +318%.
Routes lagging behind in the top 10 from 2019 are China (-66%), Hong Kong (-44%), Cambodia (-31%) and, surprisingly, Russia (-98%) despite its close political ties. However, China’s absence has affected Vietnam less than Thailand, despite it accounting for 15% of total international seat capacity in August 2019.
Instead, Vietnamese airlines are aggressively opening new routes and strengthening their capacity, especially between Vietnam and Australia and Vietnam and India. The Indian route is mainly served by Vietnam Airlines, Vietjet and Indigo, while the Australian route is jointly led by Vietnam Airlines, Vietjet and Jetstar.
In terms of growth on the Vietnam-Indonesia route, Vietjet has significantly improved connectivity and increased seat capacity by 823%, from 8,000 in August 2019 to 73,000, and this growth will continue with the announcement that the airline will begin operating a new Vietjet route between Jakarta and Hanoi from September 2023. The airline aims to carry 1 million passengers per year between the two countries.
Vietnam launched visa policy reform on August 15 and is seeing results, but as of August 2023, international arrivals have only reached 7.8 million since the start of the year, and it is still struggling to approach Thailand’s arrival levels.
But when you look at the bulk of seat capacity in these 11 destinations, one message becomes clear: while seat capacity in inter-Asia destinations has not yet returned to pre-pandemic levels, it still accounts for the vast majority of all seats within the region.
And with China holding many of the recovery cards for destinations such as Thailand, Japan and Taiwan, capacity recovery will remain slow for airlines that have not diversified their routes.
