Southeast Asia bets on its promising airline industry
Southeast Asia is emerging as the new El Dorado of the airline industry, with billions of dollars invested in expanding airports and preparing them to accommodate more passengers, despite geopolitical and environmental concerns.
New airlines are preparing to take flight in the region, such as Really Cool Airlines, founded by an industry veteran, which is due to connect Bangkok to Japan from mid-2024.
“You have to be crazy” to start an airline today, Patee Sarasin, a Thai entrepreneur and CEO of this new company, admits to AFP.
“It’s a lot of money. It’s exhausting to raise the funds,” admits the former head of low-cost carrier Nok Air.
But the entrepreneur anticipates a “boom” in the sector in the region and wants to capitalize on it.
“Southeast Asia will probably be one of the centers of the universe in the future, with Europe and the United States slowing down,” he argues.
In Southeast Asia, public and private actors share dreams of greatness even though the sector has not yet recovered its pre-pandemic level of activity.
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Boeing forecasts a 9.5% annual growth in air traffic in the region over the next two decades, significantly higher than the world average of 6.1%, thanks to the development of tourism and the middle class.
The aircraft fleet in Southeast Asia, which currently accounts for 10% of global traffic (more than 500 million passengers in 2019), must quadruple by 2042 to meet the growth in demand, predicts the U.S. manufacturer.
But there are dark clouds on the horizon, such as an over-reliance on the Chinese market and the trap of over-investment, just as pressure mounts to limit the carbon emissions that fuel climate change.
Great Ambitions
Thailand has launched projects to modernize its airport infrastructure in Bangkok, on the bucolic island of Phuket and in the northern city of Chiang Mai, with hundreds of Buddhist temples.
Vietnam is also building what should be the country’s largest airport in Ho Chi Minh City.
The megastructure, costing some $15 billion and scheduled to be completed by 2026, is causing complaints about the tons of red dust that the work is raising and choking local residents.
Wedged between these two countries of great tourist attraction, Cambodia wants to make the future Phnom Penh airport, scheduled for 2025, a regional hub that can compete with Bangkok and Singapore, with around 50 million passengers annually by 2050.
The small kingdom offered a glimpse of its grand ambition with the opening in November of the new airport in Siem Reap, the town that provides access to the imposing Angkor ruins complex.
Construction of the $1 billion-plus project, funded by China under its New Silk Roads initiative, is set to welcome 12 million passengers annually by 2040, double the number of international tourists who visited Cambodia in 2019.
“The new airport turns the tide, but more is needed” to boost Siem Reap’s appeal, says Philip Kao, president of a local tourism promotion association.
Phantom Airport
Although the shiny new terminal looks almost empty for now, its capabilities will come in handy in the future, predicts Mayur Patel, Asia director of travel information provider OAG.
“The airport is ahead of its time. When the market has recovered to the precovid level, in 2024 or 2025, we will see strong growth,” estimates this expert.
Coordinated efforts in the region to boost tourism should “eliminate travel difficulties in the years to come,” he says.
Thailand, where tourism accounts for 20% of GDP, has in recent weeks stepped up measures to facilitate the arrival of visitors from China and India, two huge pools of potential customers.
But the Chinese are not arriving at expected levels in a context of slowdown in the world’s second largest economy.
The firm OAG warns in a report of Southeast Asia’s heavy dependence on China and the possibility of negative surprises that will shatter optimistic forecasts.
An example of a misguided investment is Thailand’s Betong airport, which opened in 2022 in the remote southern tip of the country near the Malaysian border.
Months after opening, airlines stopped operations from there for lack of passengers.
With information from AFP
Plataforma Informativa de Aviación Comercial con 13 años de trayectoria.