Aviation industry is recovering, but manpower is a problem: IATA’s Philip Goh
Recovery of the industry is on track, although Asia Pacific is lagging compared to other major regions.
SINGAPORE: In the past two years during the pandemic, many people have left the aviation industry - some laid off, some by their own volition - and they may not return.
This has made staffing the “biggest headwind” for the sector that is on the mend, regional vice president for Asia Pacific at the International Air Transport Association (IATA) Philip Goh, told CNA.
“A particular concern, of course, is skilled labour. It takes time to train people,” he said. In customer service, for instance, it takes time and experience to learn how to handle people, he said.
If resources like manpower cannot keep pace, airlines will have limitations as to how much capacity they can put back, he said.
“As long as capacity cannot revert to normal then you will continue to probably face high load factors, maybe high airfares,” he said.
“So hopefully, airlines … airports are able to find the resources they need to ramp up so that they can staff their operations adequately.”
RECOVERY ON TRACK ALTHOUGH ASIA PACIFIC LAGGING
Recovery of the global aviation industry is “on track”, Mr Goh said.
This is despite the projection that the global aviation industry will lose about US$9.7 billion this year. In Asia Pacific, this figure is expected to be about US$8.9 billion, Mr Goh said.
“As of July, we are seeing air traffic already at about 75 per cent of 2019 levels. This is of course driven a lot by the domestic recovery,” he said.
International air traffic, at 68 per cent compared to 2019, is however recovering slower, he added.
Zooming in on Asia Pacific, Mr Goh said that the region is lagging behind the major regions of the world. Air traffic in the Asia Pacific is 54 per cent of 2019 levels, with international travel even lower at 35 per cent.
On the reasons for the gap, Mr Goh noted that Asia opened its borders at least six months later than the West.
Another factor for slower recovery in the region is China’s zero-COVID policy, said Mr Goh. The policy discourages domestic travel and where many other countries have removed restrictions for international passengers, China requires polymerase chain reaction (PCR) tests to be taken.
“China, unfortunately, is a major influencer of the recovery, so some markets in Asia are crucially dependent on China. So, so long as the zero-COVID policy is maintained in China, we will not be able to recover fully. It will take us still some time to get there,” Mr Goh said.
The opening up of China and Japan will help to accelerate the recovery for Asia, he added.
LOOKING TOWARDS PROFITABILITY
While Asia Pacific is “a long way off from recovering to the normal times” momentum is very strong, Mr Goh said.
“We believe that we will see the recovery continue to take shape into the end of the year,” he said.
In the Asia Pacific region, recovery may hit about 73 per cent of 2019 levels while globally, recovery is expected to reach about 82 per cent.
“If the recovery momentum continues the way we are seeing in the last few months, actually there's a fair chance that we may see profitability start to come in 2023,” he said, adding that US markets are already seeing profitability this year.
While air traffic is still on the rebound, the air cargo business is already in a “good place”, said Mr Goh.
“Cargo is going to set some records this year I think,” Mr Goh said. “We expect cargo to reach about 68 million tonnes this year and that if we reach there would be about 11 per cent higher than 2019.”
If there's going to be recession next year, however, it could impact cargo demand, Mr Goh noted.
“Some of these shipments may not happen as much so we have to wait and see whether that materialises but otherwise cargo actually is in quite good place,” he said.