International air transport has seen a strong recovery this year, with the exception of the Asia-Pacific region, which is “significantly behind”, according to the International Air Transport Association (IATA).
“Last year, international travel was about 25% of what it was in 2019. In the first quarter of this year around the world, it was up 42%,” said Willie Walsh, chief executive of the industry body, to “Squawk Box Asia”. tuesday.
“In fact, what we are seeing is a very strong growth rate in certain markets, from the United States, from Europe, from Latin America, all touching around 60%.”
For example, shares of United Airlines added more than 3% in extended trading on Monday after the company released an update on its second-quarter outlook.
By contrast, air travel in Asia is “only about 13% of what it was in 2019,” Walsh added.
China is still pursuing its zero Covid policy, with Shanghai and Beijing tightening restrictions on business and travel. But travel restrictions imposed by China will not play a big role in the global recovery of air travel, he said.
“The good thing is that there are a lot of other markets opening up, so airlines have the opportunity to expand their network…to those markets,” he added.
Increase in “Premium” travel
Asked if the commercial segment of the airline industry would return to pre-pandemic levels, Walsh said the recovery would be “a little slower.”
“We have a lot of business people flying economy class… business recovery is lagging slightly behind,” he added.
“But I think everyone would now accept that there won’t be any fundamental structural change that we all thought might happen.”
On the other hand, he observed that there are more “premium” travelers who travel in first class or business class.
“It indicates what has been a very large segment of the market, which we call high-end leisure…what we’re seeing is people have more disposable income and are willing to pay for that premium and that experience. .”
“I fully expect bonuses [to] continue to recover quickly,” added Walsh.
To meet this demand, airlines are offering luxury cabins in hopes of getting well-paying customers to shell out for more space on board.
For example, Singapore Airlines observed that business class seats on planes sold out before economy class seats, which is a “reversal of a pre-pandemic trend”.
Air Cargo Challenges
Even as the air travel recovery gains momentum, IATA sees “some challenges” for the global air cargo market.
“We had record performances in 2021 and continue to improve in 2022…but they’re just a bit off from those 2021 highs.”
Walsh attributed it primarily to Russia’s attack on Ukraine. “A lot of freight was transported by Russian freight operators, security was totally destroyed,” he added.
IATA said in a report that air cargo volume fell 5.2% year-on-year in March.
“The war in Ukraine led to a decline in capacity used to serve Europe, as several airlines based in Ukraine and Russia were crucial carriers in the region,” he writes.
“The continued spread of Omicron in Asia, and China in particular, is causing further lockdowns and labor shortages. These have heavily impacted manufacturing hubs in China and Asia, which in turn has adversely affected air cargo transportation in markets related to the region.