Asia’s international air capacity recovery has largely been a mixed bag due to the varying timelines for reopening across the region. So where are we seeing the most, and the least, recovery? And have there been any surprises so far?

For this analysis, we have explored 11 markets:

• China
• Chinese Taipei
• India
• Indonesia
• Japan
• Malaysia
• the Philippines
• Singapore
• South Korea
• Thailand
• Vietnam

Compared to 2019 levels, India is by far the most recovered market with international seat capacity in August 2023 exceeding 2019 levels by +4%. Vietnam is not far off, at -8% from pre-pandemic levels, Singapore -11%, Indonesia -12% and the Philippines -17%.

Middle East - Asia routes seeing faster recovery

Looking at India, it’s interesting to see where recovery has - and hasn’t - taken place on its top international destinations by seat capacity.

Six of India’s top ten international country markets in August 2023 have now exceeded pre-pandemic capacities:

• UAE (+8%)
• Saudi Arabia (+33%)
• Singapore (+11%)
• Qatar (+6%)
• UK (+53%)
• Kuwait (+5%).

What you may well have spotted is a distinct trend towards Middle Eastern routes outperforming August 2019 levels. From India, Southeast Asian routes (with the exception of Singapore) seem to have lost their shine. Thailand, which in August 2019 was ranked the second largest for international seat capacity from India, fell to fifth place (-29% of August 2019 capacity) whilst Malaysia, previously in fourth place, fell to eighth place (-36% of pre-pandemic capacity).

This stronger recovery for Middle Eastern routes isn’t unique to India. In Indonesia, some of the highest recovering routes are Saudi Arabia (+79%), the UAE (+10%) and Qatar (+2%). We can assume that much of the growth in Indonesia-Saudi Arabia routes is being driven by its Muslim population embarking on Umrah pilgrimages. In May 2023 Saudi Arabia launched its e-visa application for Hajj and Umrah pilgrimage which sped up the process - and the Saudi Arabia Tourism Authority is supposedly planning to open its first office in Jakarta soon.

For the Philippines, too, their Middle East air capacity has surpassed 2019 levels, with the UAE seeing +16% recovery and Qatar +9%.

Strong recovery for China-transit hub routes

China, unsurprisingly given its complicated and recent reopening, is not keeping pace with its Asian peers, at just 50% of 2019 international air capacity in August 2023. But, considering it was at 13% in January 2022, it has been ramping up steadily.

Once more, there is a clear trend toward international routes seeing higher levels of recovery: transit hubs, namely the UAE (-13% vs Aug-2019), Singapore (-22%) and Hong Kong (-29%). For capacity to these destinations, national flagship carriers are taking the majority share of the routes. 

With Russian airspace remaining problematic, these hubs seem to be the logical transit points to bypass the issue.

Of the top 10 international destinations by seat capacity from China in August 2023, those which are seeing the lowest levels of recovery, Japan (-55%), Chinese Taipei (-48%) and Vietnam (-52%) were not initially on the permitted list for Chinese outbound tour groups in February 2023. Vietnam was added in March 2023, Japan was just added in August 2023, and Chinese Taipei is still waiting to be added.  However, one of the international destination routes that does have surprisingly low growth from China is Thailand (-63%).

IS Thailand in trouble?

The low recovery rate of air capacity between China and Thailand explains Thailand’s lower than average international seat capacity recovery, -31% vs August 2019. In August 2019, China accounted for the lion’s share of all of Thailand’s international seats at 24%, totalling 2.3 million seats. That’s almost four times the second largest international route by capacity, Singapore, at 638k seats.

But it remains troubling that recovery for this particular route from China seems to be ramping up more slowly in comparison to other Asian destinations. Thailand is also seeing low levels of recovery from Japan (-43%) and its latest desired source market, India, is lagging at -29%, too.

Srettha Thavisin, the newly elected Prime Minister in Thailand, promised in late August to revisit visa requirements for Chinese and Indian travellers, believing that this was one of the greatest factors holding back recovery, particularly after the Tourism Authority of Thailand recently calculated that easing visa restrictions could add an extra 700k Chinese visitors in 2023. The Golden week holiday proved to be an opportunity not to be missed to implement a visa waiver scheme for Chinese travellers and the Prime Minister personally greeted the first flight who arrived on Monday 25 September from Shanghai, under the new visa waiver scheme.

Looking at the flight capacity data tells of challenges ahead however - yes, the easing of visa restrictions potentially will generate additional interest, but will there be the flight capacity to carry those additional passengers to Thailand?  With Chinese carriers yet to fully file their winter schedules, only time will tell.

Thailand also faces a challenge for its inbound tourism industry when it comes to Japan, its second largest air capacity destination in Aug-2019, which dropped to seventh place in Aug-2023. Thailand is rightly concerned about a potential tourism deficit between the two countries: whilst in Jan-Jul 2023, 547k Thais visited Japan, just 393k Japanese travellers visited Thailand in return.

All Nippon Airways’ new low-cost airline, Air Japan, announced that they will fly to Bangkok from Feb-2024. However, the airline’s President stated that 70% of those passengers would be Thais and just 30% Japanese passengers. The deficit looks set to continue.

Thailand’s overall target for international visitors of 29 million may look feasible, given that it was at 17.6 million as of 29 Aug. But can it continue to push beyond that limit in 2024 to hit its target of 30-35 million?

Could Thailand’s loss be Vietnam’s gain?

Whilst Thailand is grappling with returning to pre-pandemic air capacities, Vietnam, by contrast, is seeing some outstanding recoveries: Japan at +13%, Chinese Taipei at +14%, Australia +71% and India growing from zero seats in Aug-2019 to 118k in Aug-2023. Indonesia, not in the top 10 for international seat capacity for Vietnam, has seen a +318% growth rate.

The routes lagging behind from 2019’s Top 10 are China (-66%), Hong Kong (-44%), Cambodia (-31%) and, surprisingly given their closer ties politically, Russia (-98%). However, China’s lack has not impacted Vietnam to the same extent as for Thailand, despite accounting for 15% of total international seat capacity in August 2019.

Instead, Vietnamese airlines have been aggressively opening new routes and bolstering capacity, particularly between Vietnam-Australia and Vietnam-India. For India, routes are being largely operated with Vietnam Airlines, Vietjet and Indigo, whilst for Australia, Vietnam Airlines, Vietjet and Jetstar Airways have been jointly leading the charge.

As for the Vietnam-Indonesia growth, it is Vietjet who have supercharged connectivity, increasing their seat capacity from Aug-2019’s 8k to 73k, +823%. And this will only grow, with the announcement of a new Vietjet route between Jakarta-Hanoi to start operating from Sep-2023. The airline is aiming to carry 1 million passengers annually between the two countries.

Vietnam, having launched its reformed visa policy on August 15, is out to make its mark - but with just 7.8 mil YTD international arrivals as of Aug-2023, it still has an uphill struggle to come anywhere near as close to Thailand’s inbound arrivals level.

However, one message is clear when looking at the majority of seat capacities for these 11 destinations - whilst Asia to Asia destinations are largely not seeing seat capacities return to pre-pandemic levels yet, they still account for the majority of all seats within the region.

And with China holding many of the recovery cards for destinations such as Thailand, Japan and Chinese Taipei, it will still be a slow recovery of air capacity for those who have not diversified their routes.