Boeing Co posted a record $12bn annual loss on Wednesday.
Full recovery in regional air travel may take until 2025, says data firm OAG, compared with its earlier 2024 forecast.
A fragile recovery in Asian aviation is being snuffed out by a resurgence of Covid-19 in the region, pushing back forecasts for when air travel will get back to pre-virus levels and weighing on jet fuel margins.
Chinese seat capacity on domestic and international flights has fallen more than 20% from the end of September, when it almost got back to January 2020 levels, according to OAG Aviation, a flight data and analytics provider. People are being encouraged not to travel over the Lunar New Year period, which runs through early March, suggesting capacity may not rise until late this quarter.
The rapid rebound in Chinese aviation had been a rare bright spot for jet fuel, which has taken the biggest hit among oil products from the pandemic. The drop in flights is more bad news for Asian refiners that are also struggling with weakening demand for other transport fuels. It’s been offset, however, by increased consumption of kerosene due to a colder-than-normal winter.
China airline seat capacity [Bloomberg]
China’s transport ministry has said the total number of trips — by air, road and rail — over the LNY period will be 40% lower than 2019. Seat capacity was 98% of January 2020 levels at the end of September, just before the Golden Week holiday, the OAG data show, before falling to 77% in late January.
While the recovery in flights wasn’t as strong in other Asian nations, it’s also gone into reverse. Thailand and Malaysia — particularly dependent on tourism — are among the hardest-hit markets. Thai seat capacity is at 13% of pre-virus levels after getting back to 46% in late-December, according to OAG. Malaysia, which reached 31% of pre-pandemic seat capacity late last year, is at 11%.
Malaysia placed most of the country under some form of lockdown last month and officials will decide whether to extend it on Thursday. There are no immediate signs of a recovery in flights in Thailand and Malaysia and there’s concern over the long-term viability of domestic airlines. OAG’s Patel said.
Asia Pacific airline seat capacity [Bloomberg]
Demand for jet fuel and kerosene will average 2.4 million barrels a day this quarter, with more heating fuel consumption offsetting less flights, said Kang Wu, head of global demand and Asia analytics at S&P Global Platts.
European flight activity looks worse than China, although better than Thailand and Malaysia. Air traffic will be 72% below 2019 levels in February and March, according to the most optimistic estimate from Eurocontrol.
Covid-19’s comeback has seen Asian governments delay plans to allow more air travel between countries, with a planned link between Singapore and Hong Kong called off late last year as cases spiked in the Chinese territory. Vaccination rollouts are expected to drive a gradual increase in flights, however, and corridors for business travelers could open up in the region.
“The resurgence has put paid to the initiation of travel bubbles across the region,” said Subhas Menon, director general of the Association of Asia Pacific Airlines. “What is worse is the seemingly haphazard and incoherent introduction of stricter control regimes affecting air travel.”