Covid-19 has sent airlines and airports worldwide reeling and predicting the future is impossible.

One thing is certain, some airlines in Asia-Pacific will fail, as the region had concerns about overcapacity and a glut of plane orders before the crisis.

“Before coronavirus, the APAC region was very busy and there was a problem with overcapacity in some countries,” comments Joanna Lu, head of consultancy Asia at Ascend by Cirium.

“Some airlines will collapse, so those who survive and make it through will enjoy emptier skies.”

Various countries and airlines have moved quickly to prop up their finances while their operations are all but grounded.

Governments in Australia, Hong Kong, Singapore, New Zealand were among those to swiftly announce a range of support measures for their aviation sector.

Lu says, “As a critical enabler of global trade and wealth, this sector needs assistance to avoid an entire collapse which would negatively impact the entire chain and the wider economy.”

However, not all the government support announced so far will have the same effect on relieving airlines’ liquidity pressures and Ascend categorises the aid into three categories: rescue, support and recover.

Lu explains that loans and loan guarantees, such as those in the United States and New Zealand, are in the rescue category, and provide the quickest and most meaningful help.

Support comprises waiving of fees and charges, while the third category is more indirect, examples being Hong Kong’s announcement of a fund to provide training for furloughed aviation workers, and China’s investment in airport infrastructure.

“These provide a long-term perspective but don’t help airlines to cope with the immediate drop in demand,” Lu says.


By IATA’s predictions, the Asia-Pacific region could lose 37% of demand, amounting to $88 billion in lost revenues. Japan and Australia would be among the hardest hit, with revenue losses estimated at $18 billion and $11 billion, respectively.

This could make or break individual companies, and independent aviation analyst Brendan Sobie says few carriers have enough cash reserves to last out a prolonged crisis, so it will come down to those which successfully bolster liquidity and secure government support.

“This is not necessarily about the survival of the fittest airlines but about which governments will follow the likes of the US and Singapore in supporting their airlines,” he says.

Singapore Airlines (SIA) has announced rights issuances of S$5.3 billion ($3.7 billion) in equity and S$3.5 billion in convertible bonds, backed by its largest shareholder, state-owned investment vehicle Temasek Holdings.

The SIA Group, along with other airlines and aviation industry companies in Singapore, will also benefit from government industry support packages valued at S$863 million, including a S$400 million job support scheme to cover 75% of employee salaries.

Sobie says that because of all these initiatives, SIA is now in a very strong, long-term position relative to the overall Asian airline industry.

“Other countries in Asia may now be pressured to come up with packages like what we have seen in Singapore and other countries outside the region such as the US,” he tells Cirium.

But he adds that not all governments may be willing or able to provide such help and that could in turn benefit SIA.

“SIA may be able to take advantage of opportunities that arise from this crisis by acquiring other airlines and accelerating expansion.”


There have been numerous estimates of how long it will take to get back to pre-pandemic demand levels, but market watchers so far agree on one aspect: domestic travel is likely the first to recover.

Governments in Australia and New Zealand have already suggested their citizens look forward to exploring their own countries once travel restrictions are lifted.

Over the Easter weekend, Australia’s tourism minister Simon Birmingham suggested that Australians may have to wait until 2021 to travel internationally, prompting Air New Zealand’s chief revenue officer, Cam Wallace to comment via Twitter that a “sobering reality” was emerging regarding the likelihood of a short- to medium-term recovery led by short-haul international flights.

At the end of March, Air New Zealand’s chief executive, Greg Foran said in a note to staff that international tourism flows made up two-thirds of New Zealand’s ticket revenue.

He predicts that revenue will drop to less than NZ$500 million ($300 million) this year, from NZ$5.8 billion annually before Covid-19, and the only way that this forecast will be improved is if New Zealanders embrace domestic travel once restrictions are lifted.

There could also be potential for regional travel, as chief executive of Auckland Airport, Adrian Littlewood suggests.

In an interview with the New Zealand Herald on 13 April, he proposed that Australia and New Zealand consider setting up a trans-Tasman bubble, provided the two countries continue their success in containing the spread of Covid-19.

“People are anxious about inbound arrivals,” he said. “That’s very understandable. But at some stage, we need to look at what a return [to open international borders] looks like. We need to start now.”

Air New Zealand’s Wallace approves of the idea, saying in a post on his Twitter account: “This would be very encouraging if the health solutions stack up. [Pre-Covid-19, Air New Zealand] had about 22% of our [available seat kilometres] deployed to Australia.”


Besides tourism, shifts in global trade flows immediately after the coronavirus crisis has passed will shape the recovery too.

Ascend’s Lu says that even though China has resumed domestic flights, it should not be seen as a sign that everything will be fine.

“The spread of Covid-19 has shown that many businesses depended too much on one region and put them on notice that they need to diversify their supply chains,” she says.

“If the US government succeeds in bringing manufacturing out of China, there is potential for the unemployment rate to rise which might affect travel demand.”

In New Zealand, Auckland Airport has started to raise the possibility for more air freight. It estimates that annually, a widebody delivers NZ$200 million in tourism value, but NZ$260 million in export cargo.

Scott Tasker, the airport’s general manager aeronautical commercial, suggests that producers should shift more of their exports from sea to air, arguing that this will help the country’s economy recover.

He says: “Only 1% of New Zealand’s beef and lamb exports travels by air, despite earning NZ$10 per kilogram more than sea-freighted product. Shifting a further 1% more onto airfreight would add NZ$90 million to export earnings.”

Singapore, a key regional hub for both trade and transport, certainly sees the value of evolving trade patterns.

The country’s transport minister Khaw Boon Wan said on 6 April that while recovery will happen, it will not be an easy return to how things were before.

“Supply-chain resilience will become even more important,” he said, adding that he expects more local production.

“As global trade flows shift, we must still secure and strengthen our role as a major knot in global supply chains.”

In turn, the government’s early action to protect its economy will likely help SIA and Changi maintain their status in Asia.

“We have much to do to prepare Singapore for recovery,” Khaw says. “Even in crisis mode we must work to enhance our reputation as the one of the most reliable hubs in the world.”

This analysis was written for Cirium by Victoria Bryan