Safe and sustainable domestic travel is a prerequisite for international travel to resume in the Asia Pacific region. Alexander Robinson explains why the 2023-24 timeframe seems reasonable.
On 28 July, a Singapore Airlines A380 departed long-term storage from the Asia Pacific Aircraft Storage facility in Alice Springs, Australia, and flew to Sydney before returning home to Singapore two days later. Social media of the superjumbo’s powerful and impressive departure – with red dust billowing from the jet exhaust on rotation – was widely shared and well received; and it was symbolic: a behemoth of mass air travel airborne again.
However, the jet was not repositioning for a firm re-entry into revenue service. It was simply rotating through Singapore Airlines’ scheduled maintenance program, which takes place at their Changi-based facility. Optimistically, it may be prepared to re-enter service at some point, but we cannot know for certain.
This highlights the disparate state of commercial aviation in 2021. International travel has flatlined, while domestic travel fibrillates in and out of life within different local regions. Asia Pacific, including China, is one of the hardest-hit regions, given its reliance on international travel as both a destination and transit hub, its mass population centres, and its pre-pandemic air travel and pilot demand growth, overtaking more established North American and European markets.
Just as an aircraft such as the A380 is an orchestra of systems – the state of the commercial air travel industry in Asia Pacific relies on complex and interacting systems (post-Covid outlook, regional economics market drivers, etc.) against which timelines are almost impossible to predict. What is certain, however, is that the industry and region can expect an imminent pilot shortage which should be planned for now.
Global and Regional Airline Recovery
At a global level, ICAO’s Air Transport Bureau show that the decline in total passengers in 2021 against 2019 is expected to be -44 to -48%, slightly better than the -60% decline of 2020. Historically, this puts 2020 at roughly the same level of global air traffic of the year 2003, and 2021 on par with around 2005.
IATA Economics highlight that while 2020 experienced a universal drop in domestic and international travel by all nations, 2021 is less predictable. Air travel in 2021 is a complex function of the vaccine distribution pace, new cases, new Covid strains, the degree of risk aversion of governments; as well as travel necessity, certainty, and the size and attractiveness of domestic markets. These variables explain why we are seeing unpredictable and divergent domestic travel recoveries and relapses around the world, with Asia Pacific increasingly identified as one of the worst regions from a recovery perspective.
Generally, Russia, China, the US, and Brazil are high-profile air travel markets that have exhibited relatively consistent domestic revenue passenger kilometre (RPK) growth from a low point in mid-2020. This growth is explainable through limited domestic travel restrictions, government-provided domestic tourism incentives, increased vaccination rates, and reduced Covid rates. Without these factors in harmony, domestic travel is at risk, as witnessed in Japan, with travel restrictions and low vaccination uptake; and in India, with strict travel controls.
To illustrate the systems-level interaction between variables, China’s domestic RPKs between December 2020 and March 2021 suffered a drop of about 50%, having enjoyed almost five months of January 2020 domestic travel levels. This trough coincided with the Chinese New Year, a peak travel period, and was significantly depressed due to an increase in new Covid outbreaks and subsequent domestic travel restrictions. Rather pessimistically, Bernstein Research warned not to expect viable domestic or international travel for China before February 2022, supported by Cirium’s recent analysis showing August domestic flight activity reduced by nearly a third compared to July due to ongoing Delta-variant outbreaks and efforts to contain them.
In good news, real GDP growth across Asia Pacific has been trending upwards from a year ago. The region saw a sharp decline into negative growth in 2020 (except China, which saw a decline but still overall growth for the year), followed by a probable positive 2021. ‘Probable’ because there is so much forecast uncertainty due to the changing nature of the pandemic, and the emerging division of recoveries and responses throughout Asia Pacific. But still probable as it is difficult to foresee a more challenging and depressed year in economic terms than 2020.
This is not an economic analysis, but it is important to recognise that “improving economic activity has been historically associated with healthy demand for air travel.” (IATA Economics) There is consensus that the global (and Asia Pacific) economy is recovering, while aggregate consumer confidence is also generally increasing.
International and Domestic Travel Trends
International air travel is a little easier to make sense of as it is predicated on worldwide cooperation and domestic control of the pandemic. Obviously, we are not there yet, with less than 30% of the world population having received at least one dose of a vaccine. Until international air travel corridors open multilaterally (i.e., not just bilateral arrangements between ‘bubble’ nations, such as Australia and New Zealand’s stop-start corridor) to enable global tourism and business to re-occur, international air travel will continue to languish at less than 70% of 2019 levels. In Asia Pacific, international air traffic is down a staggering 94.4% from April 2019 levels.
Nine of the top 10 busiest domestic routes in the world are, or at least were pre-Covid, in Asia Pacific countries – within South Korea, Japan, Australia, China, and India. Furthermore, in 2019, nine of the top 10 busiest international routes were also within the region. Country-by-country analysis reveals the same trends: every country’s domestic travel situation is dictated by interacting variables of pandemic case rates, government risk appetite, domestic travel policies and incentives, and underlying travel demand.
Australia’s domestic travel situation provides some interesting observations relevant to other Asia Pacific countries. In early August over 60% of the country’s 25 million people were under strict lockdown conditions. Australia’s geographic isolation has enabled its federal and state governments to adopt a ‘zero-Covid’ suppression approach and for much of 2020 and early 2021 Australia enjoyed case numbers close to zero. However, when and where cases have occurred, states have implemented varying degrees of lockdown measures – some highly restrictive. These unpredictable and blanket lockdowns continue to wreak havoc on the ability of the aviation industry to deliver services, as we have seen with Qantas Group. From pre-pandemic profitability, the company has lost close to A$5 billion since February 2019, prompting the group to stand down or dismiss over 16,000 of their 30,000 employees, and write down or off billions of dollars of assets.
Australia’s conditions are unique to Asia Pacific, but they highlight the unpredictable nature of interacting variables and how challenging it is for airlines and the industry to forecast and plan for a post-pandemic ‘normal’.
As IATA summarised, “the robust performance of some domestic markets imply willingness to travel is still strong. But extending this to international markets requires better international coordination, and a more pragmatic approach to testing and travel certificates. This is a useful summary, but not necessarily practical guidance.
In other words, underlying domestic travel demand is reasonably strong, whether for business or leisure. But conditions for safe and sustainable domestic air travel are complex, and markets and governments are working these out in real-time, often with unintended and sometime negative effects. In some cases, airlines are looking to shape their own destiny through mandatory vaccines for staff, such as Qantas, Singapore Airlines, and Malaysian Airlines recently announced.
Training as Part of the Solution
The Asia Pacific region will recover, but we do not know exactly when or at what pace. Both Boeing and CAE note that the fundamentals that have driven air travel over the past 50 years and doubled air traffic over the past 20 years remain intact; and Airbus and Boeing continue to foresee immense opportunities in Asia Pacific – in terms of fleet renewal and new personnel to support growth. However, the pilot shortage and aircraft backlog problems we were facing in 2019 are reemerging with intensified effect.
When the pandemic initially hit and affected travel, all airlines rapidly furloughed, stood down, or laid off aircrew. This was a shock, given that 2019 saw a pilot shortage in effect. By 2020, there was a surplus of pilots in 2020, driving many to retire or leave the industry.
Asia Pacific, with the fastest growth trajectory and highest underlying demand, is projected to see a shortage of 23,000 airline pilots by 2029, potentially limiting recovery and growth (Oliver Wyman). Today, we are seeing flights regularly cancelled due to staffing issues, particularly in the US, where air travel demand has surged over the northern summer and airlines have not been able to deliver enough scheduled services. CAE forecast that by the end of this year 27,000 new pilots will be needed globally to help cover the industry’s loss of over 90,000 pilots.
“How quickly airlines can regrow their operation will be guided by how quickly they can regrow their pilot ranks”, according to a 2019 Oliver Wyman study. The velocity of this depends on training efficiency, pilot sourcing, and the appeal for pilots to join or remain.
New technologies, such as mixed and virtual reality training, and Competency-Based Training and Assessment (CBTA), such as the use of flight and simulator data collection for tailored training, may be adopted by, and in many cases are being led by commercial pilot training organisations. Captain Matt Gray, former Head of Training and Checking at Qantas, noted, “While flight training has been taking place for 120 years, we’ve really only seen two iterations of training methodology: in-aircraft and then full-flight simulators, but now the industry is at an inflection point where data from aircraft, simulators, and pilot biometric data could be collected and integrated to enable more effective and efficient pilot training – this is the third iteration of flight training".
A data-driven approach to training enables optimised performance, safety, and the learning experience, and there are a range of technologies, processes, and training strategies available to training organisations and departments that span the cost and complexity spectrum. For example, CAE, L3 Harris, FlightSafety International, and Frasca International are all marketing proprietary data-driven training systems and analytics platforms with an aim to expand and accelerate the rate and quality of training qualified pilots in FFS environments. There has also been a surge in third-party providers and boutique flight simulator service providers offering innovative and discrete analytical, instructor-enabling training tools.
During this pandemic-inflicted period of reduced activity, airlines in the region could be looking at these products and services, and considering which flight, simulator, and pilot data-driven solutions are relevant to their own operational, safety, training, and business objectives. The industry has a time-sensitive growth opportunity and a wide range of options to enable operators to improve training, and subsequently their business models – to adapt to an imminent pilot shortage, and to modernise for growth. As Captain Gray articulated, “Now is an opportune time for airlines to set themselves up for true evidence-based training – tools that will help transfer 10,000 hours of experience into a 250-hour trainee pilot”.
About the Author
Former RAAF pilot Alexander Robinson is a member of the Board of Directors of the Australian Industry & Defence Network (AIDN).