Asia Pacific air passenger traffic plunges nearly 98% on year, cargo down 19%

Singapore — Asian air passenger traffic faltered for the fourth consecutive month in May as air travel demand buckled under the pressure of the coronavirus pandemic, preliminary data released by the Association of Asia Pacific Airlines showed June 25.

Asia Pacific airlines carried 785,000 international passengers in May, marking a 97.5% plunge year on year. The slump in demand, combined with a 92.5% fall in available seat capacity, led to a decline in the average international passenger load factor to just 28.40% in May from 78.80% a year earlier, AAPA added.

Air cargo market was similarly weak, and air cargo demand -- as measured in freight tonne kilometres -- fell by 19% year on year. With offered freight capacity decreasing by 20.1% for the month, the average international freight load factor rose just marginally, by 0.9 percentage points to 60.9%, reflecting the capacity crunch experienced in preceding months as a result of the sharp declines in belly-hold space on passenger aircraft.

"The plunge in passenger demand in the month of May, and declines in air cargo volumes, underscore the immense challenges that airlines are facing. Overall, the region's carriers transported more passengers and cargo compared to the previous month. But the prognosis for the industry as well as tourism and trade, remains grim," Subhas Menon, director general for the AAPA, said.

In the Asian jet fuel market, the outlook remains mixed amid uncertainty in aviation recovery as mounting fears of a fresh wave of coronavirus infections have prompted some countries to remain cautious in reopening their borders to foreign visitors.

The Australian government, for one, has refused entry and transit to all foreign nationals and will likely maintain this stance until 2021. "It's sadly very unlikely that our health crisis is likely to facilitate an opening to international travel this year," Australia's tourism minister Simon Birmingham said June 17.

The recent bears have also suppressed the FOB Singapore jet fuel outright prices to $41.31/b June 25, down $1.82/b day on day. The outright price had previously risen to a three-month high of $44.36/b on June 19, S&P Global Platts data showed.

"Countries are holding back to lift their borders for international flights because of the second wave [of coronavirus], people's confidence level [on air travel] did not improve much, domestic travelers will still have to think hard if they want to fly," a Singapore-based refining source said.

In the derivatives market, the Q3/Q4 quarterly jet fuel/kerosene spread also trended lower and was assessed at minus $2.24/b June 25, widening 10 cents/b day on day, Platts data showed.

"With recent consumer surveys indicating an increasingly cautious stance on air travel, the return to normalcy will likely proceed slowly, reflecting the uncertainty in the outlook, as States remain wary about lifting restrictions and continue to impose onerous conditions on travel," Menon added.