The Asia-Pacific aviation industry has witnessed potential growth over the years owing to the increasing demand for air travelling and emerging international trade activities. As per the International Air Transportation Association (IATA), in January 2019, Asia-Pacific carriers reported an increasing demand for international passengers by 7.1% than January 2018. In January 2019, the capacity of international passenger traffic in the region increased 5.1%, and load factor reached 81.7%, a rise of 1.5 percentage points as compared to January 2018, which is the second largest among regions. This is spurred by increasing incomes and a significant rise in the number of airport pairs.
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In January 2019, Asia-Pacific held the largest share of 34.5% in the total passenger air traffic in terms of revenue passenger kilometers (RPKs), followed by Europe (26.7%) and North America (22.4%), respectively (IATA). However, the Asia-Pacific aviation industry is currently facing a significant decline in domestic and international travelling amid COVID-19 pandemic. The cancellation of flights, travel bans, and border closures have resulted in the decline of the Asia-Pacific aviation industry. As per the International Civil Aviation Organization (ICAO), in March 2020, a remarkable decline of 82% in international passenger capacity was reported in China.
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As the coronavirus is originated from China, the global passengers travelling from China is the major risk factor to the countries where the flights will arrive. As a result, several countries have reduced or cancelled their flights to and from China. For instance, in January 2020, British Airways suspended direct flights to and from China, due to the confirmed cases of COVID-19 infection in Germany and France. On 28th February 2020, United Airlines have widened the suspension of flights between the US airport hub locations and Hong Kong, Shanghai, Chengdu, and Beijing through 30th April 2020. This measure has been taken due to the significant drop in the demand and outbreak effect.
Likewise, the airlines of India have also cancelled a large number of flights to China, earlier the first case in India confirmed on 30th January 2020. This, in turn, resulted in a remarkable decline in international passenger traffic in the country, which in turn, has negatively affected the China Aviation Industry. Likewise, in India, the international passenger capacity reduced by 27% due to the increased travel restrictions in the country. As a result, most Indian airlines have cancelled a large number of domestic and international flights to curb the outspread of coronavirus in the country. Due to this effect, on 20th February 2020, IATA estimated that COVID-19 epidemic will likely result in a 13% full-year loss of demand for passengers for airline operators in the Asia-Pacific. This will cause a revenue loss of $27.8 billion in 2020 for the carriers. A large number of impact is anticipated to be on those carriers who are registered in China. Therefore, COVID-19 is expected to significantly affect the growth of the Asia-Pacific aviation industry.
The study on the impact of the Asia-Pacific aviation industry is classified based on verticals, which include passenger airlines, cargo airlines, aircraft manufacturing companies, airports managing companies, and others. Passenger airlines are significantly affected by the COVID-19 crisis, as most of the airlines across the globe have cancelled or declined their international and domestic flights to limit the spread of coronavirus in their countries. Further, cargo airlines have affected by this outbreak owing to the reduction in foreign trade activities coupled with the shutdown of production activities amid COVID-19 outbreak. The manufacturing industry in China, which is one of the largest air cargo markets globally, declined dramatically due to travel restrictions and widespread factory closures, which in turn, affected the Asia-Pacific cargo airlines industry.
Some key players affected by the coronavirus crisis include China Southern Airlines Co., Ltd., InterGlobe Aviation Ltd. (IndiGo), Singapore Airlines Group (SIA), Air India Ltd., Airbus SE, GMR Group. On 2nd April 2020, Air India Ltd. temporarily halted the contracts of nearly 200 pilots. This has resulted owing to the cancellation of international and domestic passenger flights in India due to the nationwide lockdown amid COVID-19 pandemic. This has led to a significant decline in airline revenues.
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Verticals Affected Most
• Passenger Airlines
• Cargo Airlines
• Aircraft Manufacturing Companies
• Airports Managing Companies
• Adani Enterprises Ltd.
• Air China Ltd.
• Air India Ltd.
• Airbus SE
• Airports of Thailand Public Co. Ltd.
• China Southern Airlines Co., Ltd.
• GMR Group
• InterGlobe Aviation Ltd. (IndiGo)
• Japan Airlines Co., Ltd.
• Juneyao Airlines Co., Ltd.
• Malaysia Airports Holdings Berhad
• Qantas Airways Ltd.
• Ruili Airlines Co., Ltd.
• Singapore Airlines Ltd.
• SMEC Holdings Ltd.
• Virgin Australia Airlines Pty Ltd.
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