Asia-Pacific airlines continued to carry more international passengers and cargo in November as regional travel restrictions were relaxed. But the onset of the Omicron Covid-19 variant from late November will cut into further growth that will weigh on jet fuel demand.
Regional airlines carried about 1.6mn passengers in November, the highest level since the Covid-19 pandemic began in early 2020, show Association of Asia Pacific Airlines (AAPA) data released on 11 January.
This was also a 29.4pc rise from the 1.24mn passengers carried in October and a 49.8pc increase from 2020 November. But November volumes were just 5.2pc of 2019 November passenger numbers, according to the AAPA data that aggregates traffic data from 40 Asia-Pacific based carriers.
The sharp rise in air passenger demand comes as more countries relaxed border restrictions, including Singapore, Malaysia and Thailand.
International air cargo demand remained robust in November. Air cargo demand, measured in freight tonne kilometers (FTKs), rose by 1.52pc from the previous month to 6.69bn FTKs. This represented a 16.5pc increase from the 5.74bn FTKs recorded in November 2020. Firmer manufacturing conditions and strong year-end export orders with easing Covid-19 cases boosted demand for air cargo.
But AAPA's director general Subhas Menon warned that rising oil prices will add to the challenges airlines face in restoring profitability, as jet fuel prices averaged US$92/bl in November, almost double that of a year earlier.
The full restoration of international air travel will remain some way off, said Menon. "The abrupt reimposition of travel restrictions by many governments in the face of the rising spread of the Omicron variant threatens to hold back the long-awaited revival of Asia's travel and tourism industry."
Countries have delayed their reopening plans, or put up more border restrictions with the spread of the Omicron variant, placing a cap on travel and jet fuel demand.
Asia's jet fuel margins, or Argus assessed Singapore jet fuel swaps to Dubai crude values, dropped in the second half of December to reach an almost one-month low of $9.88/bl as Covid-19 restrictions were tightened. But margins have since rebounded to $11-12/bl so far this year. This is as the jet fuel market receives some support with encouraging arbitrage economics for cargoes to head west of Suez from the Mideast Gulf. Asian jet fuel supplies are still tight with northern hemisphere winter heating demand for kerosine and limited exports from China with its reduced export quotas.
