ACI Asia-Pacific’s regional director, Stefano Baronci, provides an update on how airports in the Middle East and Asia-Pacific are faring in their recovery from COVID.
What is the prognosis for the recovery of international traffic across the Asia-Pacific and Middle East regions in 2022?
We expect Asia-Pacific and the Middle East to recover at rates between -40% and -50% versus the projected baseline, a reflection of the different reopening approaches taken by governments.
The Middle East, where air transport markets are predominantly international, took a more pragmatic approach, reopening with health-related safeguards such as testing and vaccinations.
Asia-Pacific still provides a mixed picture, with some positive developments ahead. Larger markets such as China, Japan and South Korea remain more restrictive, operating under blanket travel bans or mandatory multi-week quarantines. Recently, states such as Thailand, Cambodia, Singapore, the Philippines and Australia chose to reopen to international passengers without quarantine subject to undertaking required vaccination, which is in line with the approach taken by many other countries and the recommendations of the World Health Organization (WHO).
Are any countries ahead of the curve in terms of the recovery of international services?
From the onset, it became quite clear international traffic would be hit much harder than the domestic component. Hence, air transport markets which were predominantly dependent on international traffic suffered and are still suffering.
China, India, Japan, Indonesia, Australia, are faring better due to domestic traffic.
Some countries have taken steps conducive to the effective reopening of their air transport markets. Singapore is a good example. It committed to steadily reopening its borders with the aim to set up more quarantine-free travel agreements. Practically all countries in the Middle East and an increasing number of countries in Asia-Pacific have abandoned zero-COVID approaches to fight the pandemic.
Recent studies conducted by Oxera and Edge Health in Europe demonstrated that travel restrictions imposed in the wake of Omicron had little or no impact on the spread of the virus.
Is it possible to say what COVID has cost the region’s airports in terms of job losses, lost revenues and passenger numbers?
Compared with ACI’s projected baseline, it is estimated that Asia-Pacific and Middle Eastern airports, in 2020, the first year of the pandemic, lost 55.3% and 68.5% of their passenger traffic respectively. This is equivalent to 1.95 billion and 300 million passengers respectively. Last year demonstrated a comparable picture with over two billion passengers lost by Asia-Pacific airports and over 300 million Middle East passengers lost.
The losses in revenues are proportional to the losses in passenger traffic. In 2020, airports in Asia-Pacific lost $33 billion, while Middle East airports faced a decline of $10.5 billion. In 2021, these figures were $28 billion and $11 billion, respectively.
As for jobs directly supported by aviation, ATAG’s latest report suggests that 800,000 jobs are at risk in Asia-Pacific (19% of the total) and 115,000 in the Middle East (19%).
The high-level preliminary outlook suggests passengers and airport revenues will marginally improve in 2022, but these hinge on political decisions on the reopening of air transport markets.
How has ACI Asia-Pacific helped the region’s airports during this time?
We focused on ensuring that airport operations and public health measures were implemented in accordance with ICAO CART recommendations. Due attention was also given to economic survival of the industry and safeguarding interests in the future. This is the area where we provided much support to our members, advocating for state-support of the industry to the extent possible and risk-based approaches to travel protocols. We also participated in many dialogues with governments and policymakers on the coordinated reopening of the industry.
What has been, and possibly remain, the biggest concern for your member airports right now?
The latest ACI Economic Impact Assessment expects that passenger traffic in Asia-Pacific in 2022 will experience a decline of -49% compared to the projected baseline. The Middle East, owing to the high share of international and transfer traffic, would see a decline of -43%. The pace of recovery of both Asia-Pacific and the Middle East is forecasted to lag behind the global average of -36%.
Evidence has shown that travel restrictions have little impact on the spread of the Omicron variant, but countries are continuing to impose them, contributing to the economic and social stress experienced all around. In fact, a statement by the WHO in January recommended states consider lifting or modifying international travel restrictions, including testing and/or quarantine requirements, based on risk assessments.
ACI Asia-Pacific will continue advocating for a pragmatic and risk-based approach to reopening borders, with coordinated protocols to testing and vaccination, and interoperable digital health passes to facilitate international travel.
Do you think the crisis will lead to a revaluation of airport business models?
The road to recovery is likely to take place in multiple stages. Airport operators and investors will inevitably reconsider priorities and revaluate business models.
Although ACI does not expect passenger traffic to return to pre-COVID-19 levels until 2024, Asia-Pacific and the Middle East are forecasted to be the two fastest growing regions with compound annual growth rate (CAGR) of 4.7% and 5.2% respectively until 2040. The future of the aviation industry remains bright for the region. Nonetheless, the pandemic serves as the perfect opportunity for airports to reinvent themselves, enhancing the core of their businesses and strengthening resiliency.
To ‘build back better’, the three pillars of sustainability: Environment, Social and Corporate Governance (ESG) cannot be overlooked. Public and private finances are progressively more tied to sustainability ratings and climate actions. In fact, ESG-related criteria are increasingly used by investors and financial institutes for performance evaluation to avoid investing in organisations which might pose economic and commercial risks due to unsustainable assets and practices.
Balanced business models incorporating all three aspects of sustainability can increase public trust, attract investments, enhance efficiency, build resilience, and ensure aviation’s social and economic benefits are achieved.
Has the pandemic given the industry the kick-start it needed in terms of the introduction of touchless self-service technology?
The pandemic has certainly changed passengers’ expectations and perceptions in their travel experience with much priority given to public health. Despite the severe loss of revenue, many airports are investing in touchless, self-service technologies to meet hygiene standards, restore passengers’ confidence, and improve travel experience.
Digitalisation and biometric technology can be used to facilitate queuing, expediting check-in and security processes. As a result, airports can increase terminal capacity, improve efficiency and lower operating costs. For instance, passengers at Beijing Capital International Airport can enjoy a seamless journey, from check-in and bag drop through to immigration, security and finally boarding, enabled by facial recognition.
Similarly, Auckland and Kuala Lumpur airports have installed biometric-enabled automated and self-service touchpoints, while Tokyo’s Narita and Haneda airports have adopted facial recognition technologies to facilitate faster travel.
In 2020, Chinese airports accounted for all but three of the top 10 busiest airports in the world. Do you expect to see this trend continue in 2022?
That is hard to predict, especially as we have yet to receive the full traffic data for 2021. What we can say is that the region’s larger domestic markets, such as China and South Korea, have experienced a relatively faster recovery compared to others. However, the rapid spread of the Omicron variant in many countries, including China, rendered renewed social restrictions, the tightening of borders as well as domestic lockdowns, casting a shadow over the recovery.
Having said that, markets where domestic traffic is dominant, such as China, are expected to recover quicker, reaching pre-COVID-19 levels by the end of 2023.
In any event, to achieve a truly sustainable recovery from COVID, 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.
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