Airline profits stay stagnant in Asia-Pacific
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Airline profits stay stagnant in Asia-Pacific

Only Africa has lower profit per passenger

Asia-Pacific is forecast to have the second-lowest aviation profit per region at US$1.2 per passenger this year, mainly attributed to sluggish growth in China and supply chain disruption, according to the International Air Transport Association (IATA).

Xie Xingquan, regional vice-president for North Asia and ad-interim for Asia-Pacific at IATA, said Asia-Pacific is this year forecast to gain US$2.2 billion in profit from an industry-wide total of $30.5 billion.

The projection is an upgrade from a previous assessment of $1.1 billion, and exceeds the $600 million in profit registered in 2023.

The region is forecast to gain $1.2 profit per passenger, beating Africa, which is projected at $0.9 per passenger, but well below the industry average of $6.14, according to IATA.

As Asia-Pacific was the last region to reopen following the coronavirus pandemic, it saw a slower uptick than other regions, said Mr Xie.

He said international travel would remain subdued, particularly from China, which has recovered only 70% of the 2019 level, despite thriving domestic travel.

Meanwhile, the supply chain disruption prevented airlines from rapidly ramping up their capacity, while travellers in the Asia-Pacific region tend to travel domestically or to short-haul destinations to save money.

With geopolitical conflict causing airspace closures in the Middle East and Russia, long-haul air travel has become more expensive.

In an interview session at IATA's annual summit in Dubai earlier this month, Carsten Spohr, chief executive of Lufthansa Group, said the closure of Russian airspace meant it took up to 13 hours to fly to China from Europe. The average flying time between Frankfurt and Beijing is typically around 10 hours.

Mr Spohr said that most of Lufthansa's Asia-Pacific routes, including India and Thailand, have fully recovered, except for China.

Asia Focus

Annette Mann, chief executive of Austrian Airlines, said Asia and Thailand are crucial markets for the airline, which is growing its long-haul fleet from nine to 11 aircraft.

It recently announced an increase in flights between Vienna and Bangkok to 13 flights per week for the upcoming winter, up from seven flights per week, to cater to strong demand.

Ms Mann said that as Vienna is not a busy business travel hub compared to Frankfurt or Zurich, it has to look for the best routes to serve during winter.

She said Bangkok routes were popular last winter, while other in-demand Asian routes included those in Japan and the Maldives.

Ross Leggett, managing executive officer and senior vice-president for route marketing at Japan Airlines, said flight capacity in Asia has mostly recovered to 2019 levels, although this was not yet the case for China.

Mr Leggett said Japan's inbound market from Asia looks to be strong this summer and the trend should continue for at least five years, thanks to the weak yen.

It has also witnessed increasing shares of Thai passengers, compared to Japanese nationals, for Thailand-bound flights.

Mr Leggett said the weak yen has also been pushing Japanese passengers to travel domestically or within the region.

Japan Airlines' domestic flights have reached more than 95% of 2019's levels with a growing number of leisure tourists, while international flights have recovered by 75%, with more sales coming from inbound passengers.

In the long term, Japan Airlines aims to be a carrier that connects other Asian cities to North America by using Japan as a hub once the airline acquires more aircraft in its fleet.

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