Despite a challenging global economic climate and lingering effects of the pandemic, Asian airlines are navigating a complex recovery-one marked by shifting traveler demographics and supply chain disruptions. Carriers like AirAsia and Bangkok Airways are adjusting strategies to meet evolving demand, especially from a changing Chinese tourism market, and bracing for a potentially stronger fourth quarter. This report details how airlines are responding to these pressures, including fleet modernization plans and cautious optimism for a return to pre-pandemic passenger levels.
Asian airlines are signaling continued weakness in the region’s aviation market, with AirAsia reporting a shift in Chinese tourist profiles and a slow overall recovery. Despite potential benefits from restrictions on travel to Japan, carriers anticipate a gradual improvement, expecting load factors to exceed 80% across domestic and international routes in the fourth quarter. Bangkok Airways also forecasts strong passenger growth in the final quarter of the year and plans to replace older aircraft with new ATR models starting in late 2028.
Thai AirAsia CEO Santisuk Klongyuya told “Prachachat Business” that while the Chinese government’s recent travel advisories regarding Japan could potentially benefit Thailand, it’s too early to assess the impact. The airline notes a significant change in the behavior of Chinese tourists, particularly independent travelers and families, who now favor different travel patterns than the large tour groups of the past.
Shifting Chinese Tourist Demographics
The evolving profile of Chinese tourists necessitates adjustments to flight schedules and routes. Daytime flights are now in higher demand, while nighttime flights, previously catering to large tour groups, no longer align with current demand. As a result, Thai AirAsia has reduced capacity on routes to China by approximately 50% compared to 2019 levels. This shift reflects a broader trend in the industry as airlines adapt to changing travel preferences.
However, the decline in passenger volume from China has been offset by growth in other markets, particularly India and domestic routes. Despite ongoing economic challenges and political uncertainty impacting the domestic market, AirAsia maintains a market share of around 40%, solidifying its position as the leading domestic carrier.
Fourth Quarter Recovery Expected
Santisuk Klongyuya stated that the third quarter was the weakest period due to declining tourism from Asia, economic uncertainty, and slower consumer spending. However, the airline anticipates a recovery in the fourth quarter, with load factors expected to surpass 80% on both domestic and international flights. This forecast suggests a positive trajectory for the airline as travel demand picks up during the peak season.
“AirAsia plans to add two to three aircraft to its fleet by the end of this year, bringing the total to approximately 60 aircraft from the current 62,” Santisuk said. “An additional four to six new aircraft are scheduled for delivery in the second quarter of next year to support continued market recovery.”
Hoping for a Return of Chinese Tourists
Santisuk also highlighted the positive impact of the Thai government’s economic stimulus measures, particularly those focused on tourism. He suggested that the government consider delaying the implementation of taxes that increase operating costs for airlines to ensure the continued recovery of the tourism sector. The airline remains optimistic that the political issues between Japan and China could lead some Chinese tourists to choose Thailand as an alternative destination, though several factors, including the exchange rate, overall economic conditions, and Thailand’s political stability, will influence this outcome.
Slow Recovery Across Asia
Puttipong Prasarttongosoth, President of Bangkok Airways, told “Prachachat Business” that demand for 2024 is expected to remain moderate, as key markets in Asia continue to recover slowly. China’s recovery is lagging, as are Myanmar, Cambodia, Vietnam, and Malaysia. Japan and South Korea are relatively stable, while Europe is helping to support the market. Overall demand remains below 50% of pre-pandemic levels. Within Thailand, the island of Samui is experiencing strong growth and is the company’s fastest-recovering destination.
While revenue is projected to reach levels comparable to 2019, Bangkok Airways faces higher costs related to spare parts, maintenance, and other expenses. However, the airline anticipates a significant increase in passenger numbers in the fourth quarter, with load factors expected to exceed 70% and a total of approximately 4.4 million passengers for the year.
New ATR Aircraft Expected in Late 2028
Regarding fleet expansion plans, Puttipong Prasarttongosoth noted uncertainty surrounding deliveries from Boeing, Airbus, and Embraer due to significant order backlogs. Boeing has repeatedly delayed delivery schedules. Bangkok Airways currently operates 23 ATR aircraft and plans to begin receiving 10 to 12 new ATR models starting in late 2028 to replace older aircraft being phased out. The airline’s fleet modernization strategy aims to enhance efficiency and maintain a competitive edge.
“While larger carriers have offered models with 140-160 seats suitable for replacing the A319 fleet in the future, Boeing is unable to meet delivery schedules. Aircraft designed for use on Samui have not yet been certified, and Embraer remains under consideration, but no final decision has been made. Therefore, the direction of new aircraft procurement must await further information from manufacturers before determining the number and schedule for retiring existing A319s,” Puttipong said.
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