As of July 05, 2021
With a good part of the population already vaccinated against Covid-19 and an improvement in the overall numbers, it is apparent that the infection has been controlled. However, is it possible to think about traveling again? Have countries opened their borders yet? Is it safe to travel again with family or even on business? Restrictions? Certainly, many expect a much more positive response in this regard, but are things really much better than they were a year ago?
First, in relation to confirmed COVID cases worldwide, after a peak between April and May 2021, the number of cases has been declining worldwide and the trend for next summer in the northern hemisphere seems to be positive. Though in some parts of the world, such as Brazil and India, the number of cases still remains very high and the situation remains critical.
Figure 1 – Covid-19 Daily Cases
Secondly, worldwide vaccination is coming up well. Although not as fast as everyone wanted, but it is expected that in the second half of 2021 a good part of the population will already be vaccinated.
Figure 2 – Vaccination Doses
In other words, all the problems already seem to be solved and our normal lives are about to return, correct? Although we would like the answer to that question to be a big yes, we know that the pandemic situation is just a little more controlled than before and protective measures such as the use of masks and hygiene care will still be very important.
Then can we say that aviation is already showing signs of improvement and that more people are more willing to travel now that summer in the northern hemisphere has arrived? And how are things particularly in Southeast Asia?
Comprising of a few countries that have large populations with many beautiful natural attractions, Southeast Asia has always been a hotspot for tourism and is visited by people from all over the world. Like the rest of the world, this region was not spared from the detrimental impact of COVID closing borders and directly affecting aviation with business travel and tourism.
While some countries still allow tourists to visit, it is certainly not as simple and free the way as it was before the pandemic. Restrictions and new requirements are required for travel to take place and countries still tend to continue to impose greater travel restrictions in order to avoid new cases.
Following this line of thought, the aviation industry would be expected to see a modestly small increase in expected demand mainly for the months of July and August.
Aviation in Southeast Asia
The IATA provides a guide (https://www.iatatravelcentre.com/world.php) that helps understand the different border restrictions for each country. Travel as we know is far from returning to what it was before, and indeed a new normal is already in place, in the form of requirements of PCR tests before the flight and in some places the requirement of mandatory quarantines. Let’s take a look at some examples (evaluated to date (03/Jun)) from Myanmar, Vietnam, Thailand, Malaysia, Indonesia, Philippines, Brunei and Cambodia; countries that are not yet open to tourism and have numerous travel restrictions.
These evaluations give us an indication that tourism in Asia, specifically Southeast Asia, is still not expected to be positive in 2021, as many of these places have had an increase in the number of cases in the last month and still require restrictions, even with a higher number of vaccines administered, with the exception of Singapore where contagions seem to be much more or less controlled.
As disclosed by the AAPA (Association of Asia Pacific Airlines – https://www.aapairlines.org/wp-content/uploads/2021/05/AAPA_PR_Issue07_AprTrafficResults_31May21.pdf) the flight information for April 2021 shows a small improvement when compared to April 2020, which indicates a slight increase in flights, but still very conservative one. In summary, with the new variants of COVID-19 still being prevalent mainly in the Asian region, the opening of border openings is still a distant reality.
Figure 3 – Traffic Asia Pacific Airlines
Let’s see below how some airlines are planning:
Singapore Airlines – Recently announced that it intends to resume flights to the UK from July 2021, resuming the historic flight route between Singapore and Manchester. Although this may seem like an insignificant improvement, when considering that recovery has been long-awaited, this improvement is in fact an important one. As a sidenote, Singapore Airlines had its first loss in 48 years due to the pandemic. Therefore, with positive expectations, Singapore Airlines still hopes to receive new planes, which demonstrates the excellent business structure behind this airline.
Malaysia Airlines – Malaysia Airlines is reducing flights due to a new lockdown and operating with a reduction of 85% of its capacity. The company has also been trying to restructure itself as it sees a need to remain sustainable in the future. However, this all depends on how quickly the aviation industry’s resumes, and as many Airlines have noticed, any estimate of resumption is very fluid as cases numbers fluctuate quickly resulting in plans never coming to fruition.
Philippine Airlines – Philippine Airlines has reported a record loss in its operations and is in urgent need of a restructuring plan to help the airline survive this crisis, however, a full recovery is expected to take a long time. Unfortunately, the restructuring plans will also include the loss of thousands of jobs. To make matters worse, previously scheduled flights had to be cancelled due to government-imposed restrictions on mandatory quarantines.
Myanmar – The Airlines in Myanmar also had to reduce the number of domestic flights due to the increase in Covid-19 cases. The situation does not seem to be improving in the short term.
Thai Airways – Thai Airways was already having some difficulties and reached rock bottom during the pandemic. It is currently awaiting the approval of a restructuring plan that guarantees the continuity of its operations. If this restricting plan is approved, there may be a glimmer of hope for Thai Airway as vaccinated people could be allowed to travel to Thailand next summer.
Vietnam – Vietnam Airlines, another major airline on the brink of bankruptcy after losses caused by the pandemic have put some of their aircraft on sale to minimize its debts.
Several other airlines in Southeast Asia are showing the same trend of reporting record losses and the need for a financial restructuring plan so that they can resume flights again when the crisis passes. There is also a risk that several airlines will simply fold as they have enormous debt and even a well-crafted recovery plan may not be enough to keep them afloat.
The world is still going through big changes due to the pandemic. While we all want everything to return to normal, governments fearing that their countries will regress in fighting the pandemic prefer to keep restrictions at a higher level until the situation is brought under control and numbers of vaccinated people reach a safer level. South Asia is still combating the increase in Covid-19 cases and even though vaccination started a few months ago, the numbers are still not painting an optimistic outlook. A similar situation is also unfolding in in South America.
On the other hand, North America has seen a strong reduction in Covid-19 cases and the aviation industry has resumed with an optimistic number of mainly domestic flights. The same trend is observed in Europe, but more conservatively than the United States. However, European countries are trying to encourage more controlled tourism this summer with the implementation of the health passport to facilitate travel and at the same time incentivise people get the vaccinated in with the benefit of gaining the freedom to travel.
Everything indicates that the vaccine will make traveling in the coming months simpler, and the resumption of aviation should start to become more and more of a viable reality, but not yet in a very significant way in the Northern Hemisphere this summer.