To get insight into the challenges facing different airlines and airports around the globe, and to learn more about their priorities in the wake of the pandemic, we’ve reached out to a handful of the leading global airline and commercial aviation industry associations. In the resulting series, we asked industry experts for their opinions on trends impacting the operations of the airlines and airports in their region. In this article, Subhas Menon, Director General of the Association of Asia Pacific Airlines (AAPA), shares what’s he is thinking about.
Connected Aviation Today (CAT): After a slow start in 2022, the Asia Pacific region is witnessing a significant rebound despite inflationary pressures impacting many locations. Given that, can we expect the current “revenge” travel phenomenon to continue?
Subhas Menon: In the Asia Pacific region, a strong appetite for travel continues to spur increased passenger demand, which grew nearly three times in May 2023 as compared to May 2022. Air cargo demand remained soft, reflecting the weak global economic conditions. Trade tensions will weigh down cargo markets for some time, whereas air travel demand is expected to remain resilient despite the economic headwinds.
The aviation industry also faces inflationary pressures. Interest rate hikes could inevitably hurt corporate and individual purse strings could eventually tighten. Industry prospects in the region could hinge on the three ‘C’s: China – Capital – Costs.
China’s return to the international air travel market has been subdued. Airlines are still addressing the debt overhang accumulated over the pandemic. Also, supply chain issues are limiting their ability to deploy new aircraft and to service fleets on schedule. Higher costs, especially of jet fuel, are adding to the challenge of operational viability.
“Regulators acknowledge the importance of international aviation to the economic and social well-being of their communities.” — Subhas Menon
The International Air Transport Association (IATA) estimates that the airline industry’s net profits will reach $9.8 billion in 2023 represents a net margin of just 1.2 percent, which presents a challenge for those airlines looking to meet capital costs for fleet investments. The recovery currently underway is a multi-speed one. North America and the Middle East have raced ahead of 2019 levels. Asia Pacific is just over two-thirds of its pre-pandemic traffic, but the trajectory is set for a full recovery.
Air transport is a conduit for global connectivity. Aviation has decreased the isolation of communities. Connectivity measured in city pairs doubled in the past two decades to 2019, while air fares, halved. Regulators acknowledge the importance of international aviation to the economic and social well-being of their communities.
CAT: The uncertainty around the global economy and geopolitical concerns have done little to slow down the rollout of 5G across the Asia Pacific region. Are there concerns about interference with the aircraft navigation system, and can aviation safety and 5G co-exist?
Subhas Menon: The restrictions of the U.S. Federal Aviation Administration (FAA) on the use of certain radio altimeters for flights into the U.S. from July 1, 2023 raised significant challenges for airlines both financially and operationally. The FAA ruling was to enable US telecommunications companies to power up their 5G networks to the full capacity authorized by the U.S. Federal Communications Commission (FCC). However, the world regulates aeronautical communications on International Civil Aviation Organization’s (ICAO) recommendations, based on rules adopted by the United Nation’s International Telecommunications Union for radio frequency spectrum. Safety considerations being top of mind, unresolved spectrum issues could result in flight cancellations and the degradation of air traffic management services.
“Collaboration between regulators and industry ensures that pragmatic solutions that address concerns while minimizing disruptions are adopted.” — Subhas menon
The highest priority for the industry is safety. Any decision impacting the operation of airlines must be thoroughly evaluated to mitigate unnecessary risks. Regulators routinely engage industry stakeholders, including airlines, aircraft manufacturers, and avionics providers, before a regulation is made. Collaboration between regulators and industry ensures that pragmatic solutions that address concerns while minimizing disruptions are adopted. In this case, the economic impact on airlines associated with retrofitting or replacing radio altimeters, and the feasibility of complying with the tight timeline, have not yet been addressed.
International air transport is an intricately balanced system of rules and norms, all agreed upon and respected under the auspices of ICAO. Any disruption to this shared and collective framework poses a threat to the key pillars of international air transport, namely safety, security, sustainability, and global connectivity. Regulations that disregard obligations under international treaties and ICAO resolutions can put the global system of international air transport in disarray.
CAT: The global aviation industry has pledged to reach net zero carbon emissions by 2050. What can be done to reach the goal?
Subhas Menon: Sustainability is front of mind for the industry. By at least one estimate, every generation of new aircraft is 15 – 20 percent more efficient than the generation before. In the next thirty years, the industry must step up efforts to achieve carbon neutrality through the transition to renewable energy.
“The journey towards a sustainable future is no doubt challenging but achievable.” — Subhas menon
Compared with some other sectors, aviation is a relatively small contributor to global greenhouse gas emissions. Sustainability is a global issue that requires policymakers to take the lead role and render the necessary support. To achieve the net zero emissions goal by 2050, the entire ecosystem must work together cohesively. Like safety, no region, country, or entity is sustainable until all are. It is fruitless to fly on Sustainable Aviation Fuels only in one direction of an air route.
The journey towards a sustainable future is no doubt challenging but achievable. The effective navigation of the industry’s path ahead would depend on the three ‘D’s; Demand – Diligence – Delivery. Sustained air travel demand, diligent cost management, and delivery on safety as well as sustainability priorities, hold the key to a successful future.
Shared objectives based on reliable data on performance and outcomes should steer us towards a sustainable future. This industry has a track record of converting on challenging goals.
The views and opinions expressed in this article belong to the author and do not represent the views, opinions, or endorsement of Collins Aerospace, its affiliates, or employees.
About Subhas Menon, Director General of the Association of Asia Pacific Airlines (AAPA)
Subhas Menon joined the Association of Asia Pacific Airlines in March 2020. Subhas has over 35 years of experience in international aviation with the Singapore Airlines Group, having served in a wide spectrum of roles, including international & government relations, marketing, product development, logistics, and country and regional management.
In his various roles in the airline industry over the past three decades, he has developed a solid skill set that includes successfully building and managing relationships with different stakeholders, strong communications and public speaking skills as well as commercial acumen honed across different regions.
As Regional Vice President for an Asian airline in various regions around the world and has also served as Chief Executive of SilkAir, Subhas is familiar with the Asian airline environment, its market dynamics, and the region’s diverse political landscape. Building on his early experience in international relations, he has well-developed lobbying and negotiation skills as well as dealing with government affairs, which makes him well-placed to undertake the kind of advocacy and lobbying activities AAPA conducts as a trade association on behalf of its member airlines.
He is a graduate of the National University of Singapore with a Bachelor of Social Science (Honours) in Sociology.