Southeast Asia is betting on its promising aviation sector

First Amendment: 12/06/2023 – 13:13Last update: 06/12/2023 – 13:11

5 minutes

New airlines are preparing to operate flights in the region, such as Rely Cool Airlines, founded by an industry veteran, which from mid-2024 should connect Bangkok with Japan.

“You would have to be crazy” to start an airline today, admits Patti Sarasin, a Thai businessman and CEO of this new company, to AFP.

“It’s a lot of money. Raising money is stressful,” admits the former head of low-cost airline Nok Air.

But the businessman expects a “boom” in the sector in the region and wants to benefit from it.

“South-east Asia is likely to be one of the centers of the universe in the future, with Europe and the United States lagging behind,” he says.

In Southeast Asia, public and private sector players share dreams of greatness even though the sector has yet to regain its pre-pandemic level of activity.

Boeing expects 9.5% annual growth in air traffic in the region over the next two decades, clearly higher than the global average of 6.1%, thanks to the development of tourism and the middle class.

The American manufacturer expects the aircraft fleet in Southeast Asia, which currently represents 10% of global traffic (more than 500 million passengers in 2019), to quadruple between now and 2042 to respond to growth in demand.

But there are dark clouds on the horizon, such as over-reliance on the Chinese market and an over-investment trap, just as pressures to reduce carbon emissions fueling climate change are growing.

Big ambitions

Thailand has launched projects to modernize the infrastructure of its airports in Bangkok, on the rural island of Phuket, or in the northern city of Chiang Mai, which includes hundreds of Buddhist temples.

Vietnam is also building what should be the country’s largest airport in Ho Chi Minh City.

The giant construction, which costs about $15 billion and is planned for 2026, raises complaints about the tons of red dust raised by the work and suffocating the residents of the region.

Cambodia lies between these two countries with great tourist appeal, and wants to make the future Phnom Penh Airport, scheduled to open in 2025, a regional platform that can compete with Bangkok and Singapore, with about 50 million passengers annually in 2050.

The tiny kingdom offered a glimpse of its grand ambition with the opening in November of a new airport in Siem Reap, the city that provides access to the majestic Angkor ruin complex.

The construction of this more than $1 billion project, which is funded by China under the New Silk Roads Initiative, is scheduled to accommodate 12 million travelers annually by 2040, double the number of international tourists who visited Cambodia in 2019.

“The new airport is changing this trend, but more is needed” to boost Siem Reap’s appeal, explains Philip Khaw, president of a local tourism promotion association.

Ghost airport

Although the shiny new terminal appears almost empty at the moment, its capabilities will prove useful in the future, predicts Mayur Patel, Asia director at travel information company OAG.

This expert estimates that “the airport is ahead of its time. When the market regains its pre-Covid level, in 2024 or 2025, we will see strong growth.”

He says coordinated efforts in the region to boost tourism should “eliminate travel difficulties in the coming years.”

Thailand, where tourism accounts for 20% of GDP, has in recent weeks doubled measures to facilitate the arrival of visitors from China and India, two huge reserves of potential customers.

But the Chinese are not reaching the expected levels in the context of the slowdown witnessed by the second largest economy in the world.

In its report, OAG warns of Southeast Asia’s strong dependence on China and the possibility of negative surprises that undermine optimistic expectations.

An example of misguided investment is Thailand’s Betong Airport, which will open in 2022 in the country’s remote southern tip, near the border with Malaysia.

Months after opening, airlines suspended operations from there due to a shortage of passengers.

© 2023 Agence France-Presse