| Beyond the Tarmac |
The International Air Transport Association (IATA), the global body of airlines, predicts 9% growth for Asia-Pacific in 2025.
Which means, a region that has struggled to shrug off the strictures of Covid-19 is once again posting the highest growth rate in the world.
Aviation in Asia-Pacific supports $890bn in GDP and 42mn jobs, with the potential to increase to $2.3tn in GDP and 62mn jobs by 2043.
Analysts say rising middle-class populations, particularly in China, India, Indonesia, Vietnam, and the Philippines, are fuelling demand for both domestic and international travel.
Asia is the epicentre of global e-commerce (China and Southeast Asia leading), driving robust demand for air cargo and integrated logistics.
Asia-Pacific is home to some of the world’s most dynamic tourism markets. Countries like Thailand, Japan, Vietnam, and Australia continue to record strong inbound flows. Analysts believe regional tourism agreements and visa liberalisation policies are expected to boost connectivity.
The UNWTO and IATA forecast Asia-Pacific to contribute more than half of global passenger growth over the next two decades.
“Most countries have crossed the line of pre-COVID figures and are experiencing increasing air travel demand,” says Sheldon Hee, IATA’s Regional Vice President for Asia-Pacific.
“Four of the most populous countries in the world are in our region and all are young, emerging economies with a fast-growing middle class. We are even seeing some significant visa relaxation policies.
“But the resumption of growth comes with challenges,” he adds. “The profit margin for 2025 is expected to be just 1.9%, or $2.60 per passenger. Aviation in Asia-Pacific must become more economically robust to meet demand with a high level of customer service delivered cost-efficiently.”
Airport and airspace capacity are naturally the main considerations. On the positive side, there are at least 90 new airports under construction or in the planning stage, including significant gateways in Australia, India, and Vietnam. Each is a sign that the relevant government has aviation development on its agenda.
“But there is more room for collaboration,” says Hee. “Airlines don’t need over-investment in facilities that would require deeper cost recovery. Development must be calibrated correctly, and airlines must be part of the conversation so that investments are correctly staged.”
To assist passenger throughput — especially amid narrow margins — digitalisation in both passenger and cargo operations is essential. Every efficiency will count.
Digitalisation and contactless travel centred on IATA’s ‘One ID’ will also be key enablers in enhancing the customer experience.
India’s ‘Digi Yatra’, a facial recognition system for verified domestic customers, is leading the way but interoperability will be critical.
Meanwhile, airspace is also being upgraded across the region but there is a notable bottleneck in the Bay of Bengal where aircraft get bunched for a variety of factors.
The different levels of maturity in this diverse region mean there are also plenty of areas still reliant on older equipment, which leads to inefficiencies on a broader scale.
Air cargo is an important part of needed capacity as Asia-Pacific is a major origin point for the booming e-commerce trade. Cargo revenues are often critical to the profitability of a flight, and this is certainly the case in Asia-Pacific.
Trade barriers and tariffs could change traditional flows but demographic conditions and the desire to trade more within the region mean there are multiple opportunities for air cargo ahead.
Although the outlook remains positive for this sector, there are inefficiencies to address. Paper is still commonplace in the region and optimisation based on the ONE Record has plenty of room for growth.
“The industry is also doing a lot of work to make the carriage of dangerous goods (DG), and particularly lithium batteries, safer,” says Hee. “Good progress is being made but this work is especially pertinent to Asia-Pacific given the manufacturing in the region. We must educate the upstream shippers about the need for correct DG packaging and documentation.”
IATA said it continues to work with governments and aviation authorities to promote the benefits of aviation and the business case for unlocking capacity.
Undoubtedly, Asia-Pacific will remain the fastest-growing aviation region globally, led by China and India. Regional connectivity, tourism, and cargo are estimated to expand strongly.
That said, the region’s air traffic management systems need modernisation to handle rising volumes efficiently and safely. Despite expansion, congestion at major airports in the region remains a major concern.
