The airline industry will bounce back in Asia
Market Insight 29 January 2024 29 January 2024
Predictions 2024 - Economic Risk
As 2024 numbers reach pre-COVID levels carriers will be focused on keeping a lid on costs.
Recent developments in Asia have given growing confidence to the airline industry in this region. In the past month Malaysia has followed Thailand in waiving visa requirements for both Chinese and Indian visitors. This will have a significant impact on the appetite for tourism in both those markets for foreign visitors which will have a knock effect for the airline industry.
Many commentators believe and we agree that next year should finally see a return to tourism levels and passenger numbers in the region that we last saw in 2019. Longer term, Asia is still on track to become the world’s dominant aviation market by 2040.
It is envisaged that aircraft capacity will be able to cope with this rising demand, but carriers may struggle to recruit enough high-quality air crew given the cutbacks they were forced to make in 2020.
With greater numbers returning to the skies in Asia, we are beginning to see a rise in small claims directed against carriers. Although still modest by historical standards it is an area that our clients are telling us could escalate in 2024 and one that they are keeping an eye on.
Despite the overall optimistic outlook for the Asian airline sector and growth opportunities, particularly for well-established national carriers, there are still concerns over a range of issues which are impacting the industry worldwide as result of geopolitical tensions. Inflation remains a problem, supply chains are still under stress and carriers are seeing MRO (maintenance, repair and overhaul) costs escalating. So, while rising passenger numbers means rising revenues it will also mean rising costs which the industry is very much focused on confronting in 2024.