Philippines, Asia-Pacific air travel sector to remain below 2019 levels —Fitch Ratings

The Philippines’ and the other Asia-Pacific countries’ air travel sector is still unlikely to recover to pre-COVID-19 pandemic levels next year amid uncertainty on the development of a vaccine, debt watcher Fitch Ratings said.

In its non-rating action commentary, Fitch Ratings said that “passenger traffic at airlines in several key Asia-Pacific (APAC) markets is likely to remain well below 2019 levels in 2021, despite a recovery.”

“The pace of the recovery will hinge on each market's relative success in bringing the coronavirus pandemic under control, helping to improve passenger confidence and reduce the risk of further travel restrictions, as well as its share of international traffic, which we expect to stay weaker than domestic volume,” it said.

For the Philippines and its neighbor Indonesia, which Fitch Rating noted “where further COVID-19 spread remains a high risk,” the revenue passenger kilometres (RPK) - a measure of traffic - is seen at 35% in 2020 and 60% in 2021.

“Our forecasts are based on the assumption that a vaccine or treatment will not become available at scale in 2021, but that progress is made in controlling the pandemic,” it said.

However, Fitch Ratings said airline passenger volume could improve faster than forecast “if an effective vaccine is distributed sooner than we believe or if there is more success in containing the pandemic.”

“However, we foresee flat demand in 2021 that is well below the 2019 base should there be limited progress on this measure,” the debt watcher said.

For China, Fitch Ratings said the mainland may see rising monthly domestic RPK by October 2020, “thanks to its success in containing the pandemic.”

“Average RPKs for 2021 may recover to at least the 2019 level if China evades another wave of the pandemic,” it said.

For India, the debt watcher is expecting the average RPKs to decline by around 65% in 2020 and remain 40% below the 2019 level in 2021.

“Passenger traffic at Vietnamese airlines should rebound faster than in other southeast Asian markets due to the country's low incidence of COVID-19 cases. We forecast average RPKs of around 55% of the baseline level in 2020 and 90% in 2021,” Fitch Rating said.

Singapore Airlines, meanwhile, could witness the sharpest 2020 RPK fall, at 70%, due to its complete dependence on international routes, with 2021's RPKs staying at around 50% below 2019 levels, according to the debt watcher.

Likewise, airlines in Thailand and Malaysia are also likely to report similar levels, as they would be affected by weak international traffic volume despite the countries' success in controlling the pandemic, according to Fitch Ratings.

“We expect Australia's 2020 RPKs to be at around 30% of 2019 levels and believe a meaningful recovery will be delayed to the middle of 2021, as governments of the three most populous states - comprising the Golden Triangle route between Sydney, Melbourne and Brisbane - indicate that borders may only reopen toward the end of this year,” it said. -NB, GMA News