Air Travel Demand in Asia Pacific Expected to Soften

Air travel demand in Asia Pacific is expected to soften in the months ahead.

Analysts expect a drop of between 1 and 2 per cent on-month for May, due to Japan which is still reeling from its recent disaster.

This came after industry body International Air Transport Association (IATA) reported a drop of 2 per cent in March.

Japan’s travel industry is worth US$65 billion with 94 million travellers, and accounts for 10 per cent of the global travel market.

Analysts said Indonesia, Thailand, Vietnam and Malaysia are expected to pick up the slack in travel demand, going forward.

This is due to their large populations and strong economies, which have been driving up both leisure and business travel.

There’s yet another upside in South Korea.

“There is strong business sentiment in Korea, especially, because they want to attract more foreign MNCs away from Japan, which is a very strong business case. Korea might be coming up so maybe we’ll see passengers picking up as a result. Culture-wise, they are very similar and Korea is a very strong export-driven economy,” said Julius Yeo, lead aerospace management consultant, Frost & Sullivan.

Meanwhile, Japan remains a bearish market as analysts said ground sentiment remains very weak.

In March, Japan’s domestic market fell 22 per cent on-month, and a recovery is not yet in sight.

Shukor Yusof, aviation analyst with Standard & Poor’s said: “If you look at the Golden Week holiday last week, which is traditionally the most important travel activity of the year for Japan, there has been a marked slowdown in outbound Japanese travel.

“We are hearing significant reductions in Japanese travel on Cathay and SIA and many other carriers, and this is typically the time of the year when they travel in droves – millions of them go out within that one week. And we did not see that last week.”

Overall, analysts said Korean, Chinese and north-eastern carriers are most likely to be impacted as they rely more on the Japanese market.

They estimated that for example, Asiana Airlines saw a 25 to 30 per cent decline on-year in passenger traffic after the disaster in Japan.

Source: Channel News Asia