Air connectivity in the Middle East stands out with a 26 per cent growth in total connectivity in 2022 vs 2019, with direct links to destinations in North America, Asia-Pacific and Africa, says a report.
Airports Council International (ACI) Asia-Pacific and Middle East (ACI APAC & MID) launched the Airport Connectivity Report at the opening of its Middle East office in Riyadh.
The report, developed in partnership with PwC, said air connectivity witnessed the strongest recovery post Covid 19, with low-cost carriers (LCCs) driving the growth. On the contrary, Asia-Pacific has seen a decline in air connectivity by -38 per cent in the same period.
The report measures passengers’ ability to access the global air transport network, capturing both direct and indirect routes, and also factoring in the quality of service of each connection, such as destination choice, service frequency, onward connectivity and price, contributing to the passenger experience.
It covers a sample of 100 airports that accounts for almost 60 per cent of the combined passenger traffic in Asia-Pacific and the Middle East in 2019.
Several key factors contribute to the decline in air connectivity, including extended travel restrictions due to Covid-19, limitations on air traffic rights, constraints on airport slots, rising airfares, economic downturns, and geopolitical tensions.
This decline in air connectivity, coupled with increasing airfares, illustrates its negative impact on the recovery of air travel and the resultant inconvenience to passengers. From the passenger’s perspective, connectivity is essential for mobility, providing significant economic and social advantages. Nevertheless, preliminary rankings for 2023 suggest a positive outlook for the region.
Key Observations
The Last Region to Recover: Direct connectivity from APAC to other regions was still lagging behind as of 2022, although low-cost carriers are driving capacity growth. Airports with annual passenger volumes of 1 to 40 MPPA led the recovery, while larger airports were impacted by China’s Zero-Covid strategy with a blanket ban on international travel. Middle-sized airports, such as King Khalid International Airport (Riyadh) with a +75 per cent recovery and Hamad International Airport (DOH) with a +42 per cent, stood out.
Preliminary 2023 connectivity rankings show significant improvements in seat capacity to China from selected 100 airports, rebounding by a remarkable +937 per cent in August 2023 compared to August 2022, but still with a large margin to grow in 2024. Dubai Airport and Incheon Airport leads the preliminary direct connectivity ranking for 2023 in Middle East and Asia-Pacific, respectively.
Advantages of Air Transport Liberalisation: The gradual liberalisation of the aviation industry in the Asia-Pacific and Middle East regions has been a boon for the sector. Dubai International Airport retains No 1 ranking and Doha Hammad Airport is second in Total Connectivity ranking in 2022 across Asia-Pacific and Middle East. Tokyo Haneda Airport is at No 3. Singapore has been particularly active in air liberalization, enjoying benefits such as reduced airfares and a strong passenger traffic base. This success is attributed to a high market share of foreign airlines, extensive international routes, numerous air service agreements, and a streamlined visa policy.
Recently, Asean has emerged as the most proactive aviation bloc in promoting air liberalization. It has been focusing on both internal liberalization among its member states and broader agreements, such as the EU-Asean bloc-to-bloc initiative. However, there are some key aviation markets such as Australia, Indonesia, and the Philippines that could benefit from the further liberalization of the market.
Impact of Increasing Airfares: The cost of travel from the selected Asia-Pacific and Middle Eastern airports has increased by up to 50 per cent, threatening the recovery of the industry, according to our recent study on airfares. 69 out of the selected 100 airports experienced a decrease in airfare affordability, which correlates with the airports’ decrease in available flights, routes, and seat capacities. As measured by average airfare in relation to per-capita income, air transport became 34 per cent less affordable across the two regions.
Economic Impact of Aviation: Aviation plays a key role in socio-economic development by attracting foreign investment, supporting international trade and tourism, and creating jobs. In the Asia-Pacific, it contributed $1 trillion (3.3 per cent of GDP) and employed 56 million people, while in the Middle East, the sector generated $260 billion (9.5 per cent of GDP) and employed 4.6 million. Regression analysis confirms a correlation between GDP and seat capacity. Specifically, a 10 per cent increase in seat capacity is linked to short-term GDP growth of 3 to 3.8 per cent in the Asia-Pacific and 6.4 per cent in the Middle East.
Large margins for the increase in propensity to fly and macroeconomic factors suggest a robust outlook for connectivity.
If Macao, Hong Kong, and Singapore topped the list in 2019, 2022 saw Oceania countries like French Polynesia, Australia, and New Zealand, along with Middle Eastern countries’ such as Qatar, the UAE, and Bahrain at the forefront.
On the contrary, key aviation markets like China and India, along with fast-growing markets such as the Philippines and Vietnam, have a much lower flying propensity than Europe and North America. Favourable factors like GDP growth, large populations, a rising middle class, and ramping e-commerce position in Asia-Pacific and the Middle East for long-term air connectivity growth between 2030-2040.
However, there is a need for infrastructure development and the easing of airspace congestion to accommodate the expected growth in traffic.
Commenting on the release of the study, Stefano Baronci, the Director General of ACI Asia-Pacific & Middle East said: “This study provides an invaluable tool to the industry and policy makers to adopt the use of air connectivity indicators to appraise the performance and sustainable development of the aviation industry and its economic and social impact on countries.
“In addition, it also shows how to prioritize positive outcomes for consumers rather than simply focusing on the price-determination function for the benefit of all aviation stakeholders and the travelling public. The next step will be for ACI Asia-Pacific & Middle East to work closely with each government to promote aviation market liberalization, visa simplification, investment in the development of infrastructure with a focus on the environment, and innovation of services.”
Recommendations to improve connectivity
- Liberalize traffic rights to enhance connectivity and offer passengers affordable airfares, more choices, and superior service quality.
- Increase airlines’ seat capacity, recover and develop routes, and pursue reasonable pricing policies.
- Continue to modernize the slot allocation system, such as disincentivizing slot misuse, increasing slot performance, and opening the market to more competition.
- Flexibility to set airport charges to invest in infrastructure and passenger-friendly amenities.
- Reducing visa restrictions to facilitate international travel.
- Taking actions to reduce CO2 emissions at the airport towards the net zero goal.
