In the US, a domestic travel environment relatively free of
Covid-related restrictions has sapped much of the pent-up demand that
existed last spring and sent airfares flying.
But for some international markets, airlines likely can still look
forward to a winter, spring and summer in which they will benefit from
demand driven by the lingering aftereffects of travel regulations and
outright bans during the pandemic.
"I think there is some pent-up demand. Definitely going into Asia,"
said Bloomberg Intelligence aviation industry analyst George Ferguson.
Indeed, as the region of the world that locked down the hardest
during the Covid-19 pandemic and opened the latest, Asia-Pacific is
where airlines could enjoy the most outsized revenue improvements in
During the second quarter of last year, the three global US carriers –
United, Delta and American – offered just 811,000 combined seats to
Asia. And in the normally busy summer quarter they offered 1.1 million
seats. But schedules for the 2Q 2023 show an offering of 3.2 million
seats, according to Cirium data. That's 98.9% of what they flew in the
pre-Covid spring of 2019, even though China remains largely closed.
Numbers tell a similar story for service to Australia and New
Zealand, where United, the main US player to the region, is planning to
offer more than twice as many seats during this coming spring quarter
than it did either last spring or last summer.
Driving the adjustments are the relatively recent reopenings of
several key markets. Japan, most notably, only reopened to independent
foreign travellers in October. South Korea dropped its final testing
requirements in September. Singapore resumed quarantine-free travel for
unvaccinated travellers in late August. Australia didn't fully open to
unvaccinated travellers until July.
the second half of this year, the combination of pent-up demand and a
lack of flights has driven high airfares to the Pacific region. United
reported that third-quarter ticket yields (defined as the per mile cost
of airfare) to the Pacific region exceeded 2019 yields by 43.5%, which
was more than double its yield improvements on domestic flights or
flights to any other international region.
Hopper economist Hayley Berg said she has been observing consistently
surging growth in travel demand for the Asia-Pacific region.
Cities like Tokyo, Bangkok and Manila are particularly popular
destinations at present, with most travellers from the US making lengthy
visits of 14 to 28 days, she said.
Among the US carriers, United is the best positioned to take
advantage of the pent-up Asia and Asia-Pacific travel demand. The
carrier has more than 1.75 million seats scheduled to Asia, Australia
and New Zealand in first half of 2023, compared with 719,000 seats
scheduled by Delta and American's 403,000 seats, Cirium data shows.
Pacific exposure is one factor that led Cowen Research investment
analyst Helane Becker to declare United her best airline bet for 2023 in
a 1 December analysis.
"United has the greatest exposure to the ongoing recovery in higher-margin international travel among US airlines," she wrote.
Source: Travel Weekly