When the going gets tough, be prepared for it to get tougher, especially if you happen to be in the Asian airline industry.
Already brought to its knees by two US-led wars, one in Afghanistan and the second in Iraq provoking grim threats of retaliation from Islamist groups in Indonesia, Philippines and Malaysia and resulting in a deadly explosion last year in the island of Bali that killed over 200 people, now the travel industry is under attack from a less expected quarter.
Severe Acute Respiratory Syndrome (SARS), a mysterious flu-like illness that has so far killed more than 260 people and infected thousands in mainland China, Hong Kong, Singapore and Vietnam, is ravaging tourism and travel.
While many Asian travel agents and airline executives are trying to put up a brave face, there is no denying that many tour operators and air carriers in the region are experiencing a ‘meltdown’.
Hotels across Asia are lying empty
Leonard Tooke, a major British tour operator based in southeast Asia, explains the situation: “If the situation continues as it is, unemployment will start rising, and social tensions will increase. Hong Kong, for one, is virtually finished as an airline hub of the region and other countries are also reeling. The result is the worst crisis in the entire history of the Asian tourist industry.”
It is evident all across southeast Asia. Somerset Hanoi Towers had the highest occupancy among all five-star establishments in Hanoi city. But as Kelvin, a Singaporean manager working for the Somerset explains: “ Even our bookings are down from almost 100 to 70.”
Others have fared evern worse and occupancy rates in luxury hotels like Melia have fallen to as low as 20 percent.”
“I see the results of many years of my work going up in smoke”, laments the owner of Santika Gardens, a four-star resort in Ubud, Bali. “Nobody is coming. Our occupancy rate is zero.”
Although Indonesia isn’t yet badly affected by SARS, tourists are staying away because they would have to fly there via affected areas like Hong Kong and Singapore.
There are more problems to contend with. Some Asian hotels, including the Paradise Resort in Thaliand’s Koh-Samui are refusing to accommodate American travellers, either as a protest against the US-led war on Iraq or simply because of worries about possible anti-western attacks.
Bookings on all major Asian airlines are down. Even Thai International Airways has been hit by some 300,000 cancellations in recent weeks, despite the fact that Thailand itself claims to have SARS well under control.
One of the world’s largest airlines, Hong Kong-based Cathay Pacific, is warning that it may soon ground its entire passenger fleet. It is presently losing $3 million a day, mainly from cancellations due to SARS.
Japanese national carrier, JAL has cut its southeast Asian services dramatically, including its regular connections with Hong Kong. Singapore Airlines has lowered its capacity by 13 percent.
Airlines flying to Pacific Asia are slashing fares, but are still seeing their bookings dropping dramatically. United Airlines, the already battered US carrier, is offering extraordinarily low round trip trans-Pacific fares for as little as $400.
Financial hubs such as Hong Kong and Singapore are suffering tremendously. Conferences and seminars are being cancelled, business trips postponed or converted to teleconferencing, and hotels and shopping centres are almost empty. Compared to the corresponding week last year, visitors’ arrivals in Singapore fell by 56 percent in the first week of April, according to the Singaporean Tourist Board.
The international political climate and the threat of SARS has led to the re-introduction of numerous visa restrictions and the imposition of mandatory health certificates, further hindrances to movement in southeast Asia. The US government is warning its citizens not to travel to SARS-affected countries, including mainland China and Hong Kong. It also recommends that all unnecessary travel to Indonesia should be postponed due to the threat of "terrorist" attacks.
The Chinese government has recently ordered travel agencies to halt Chinese tour groups heading to Singapore, Malaysia and Thailand.
Malaysian authorities temporarily refused to issue visas to visitors from China and Hong Kong, while travellers from Vietnam and Taiwan must prove a clean bill of health upon arrival.
Vietnam is considering the closure of its long border with China, while its guest workers bound for Malaysia and other countries in the region are stranded, facing an uncertain future. Despite a relatively small number of new SARS cases, Vietnam is still considered a high-risk country, mainly because some of the first cases of the illness were registered in its capital, Hanoi.
Indonesia is considering tightening up its visa requirements, while both Malaysia and Singapore are continuing with the mass deportation of illegal workers, mainly from the Philippines, that began last year.
Even faraway places such as Saudi Arabia have refused entry to travellers from China, Hong Kong, Taiwan, Singapore and Vietnam.
In some countries, domestic travel has also been affected. The Chinese authorities shortened the country’s May Day holiday to five days and asked its citizens not to travel to the countryside and poor provinces where medical facilities were ill-equipped to deal with SARS patients. Beijing authorities announced the temporary closure of all entertainment spots, including cinemas, theatres and karaoke bars.
Airports in many major Asian cities are empty, flights are being cancelled, hotel reservations are down. Many tour operators and airlines are facing bankruptcy, and the economies of many Asian countries that rely on tourism are affected.
With such uncertainty and gloom stalking the streets of Asian capitals and no prospect of a rapid cure, airlines can expect more turbulent times ahead.