Despite a tangle of external challenges, Association of Asia Pacific Airlines Director General Subhas Menon strikes an upbeat note on the region’s prospects, writes Tony Harrington
Subhas Menon is in full flight.
The Director General of the Association of Asia Pacific Airlines (AAPA) has only 30 minutes, so I’ve just asked for his elevator speech on the state of airlines in the world’s fastest-growing region, which sweeps from Central Asia through China, India and Southeast Asia to North Asia, Australasia and the South-West Pacific.
The former Singapore Airlines executive started with good news. The 18 carriers he represents have all recovered from Covid and are growing faster, though sometimes differently, than they did before.
While global passenger journeys are forecast to double by 2050, Menon expects APAC’s collective markets to get there by 2040, assuming geopolitical instability eases and airlines can operate more optimally and optimistically.
That’s a big if, given the upheavals which have come since Covid, among them military conflicts, airspace closures, supply chain stagnation and trade chaos.
“We thought the pandemic was the worst crisis to hit the industry,” Menon said. “But now, if you look at what’s happening around the world, particularly in the US, we’re seeing unpredictability and disruption to trade flows and air travel for a much longer time.”
Impacts vary between markets, he said, so in measuring and managing them “we need to distinguish between a fly in the ointment and a spanner in the works.”
APAC-US air passenger traffic has declined dramatically, with average year-on-year growth now barely noticeable at less than 1%. That compares with intra-Asia traffic up around 10%, APAC-Europe up 8%, and the South-West Pacific, predominantly Australia, New Zealand and Pacific islands, 4% higher.
APAC air freight, too, has stayed buoyant, despite President Donald Trump’s uneven and ever-changing tariff threats, which, in some form, Menon still expects will go ahead.
Does that spell disaster for APAC airlines? Menon thinks not.
“All markets in the Asia Pacific region are doing well,” he said. “The fundamentals of the economies are very strong. It all depends on how quickly they can find new trade relationships and markets.”
Collectively, APAC GDP is expected to rise by 4.5% this year, well above the 3.2% global rise predicted by the International Monetary Fund.
“Cargo is the weathervane of the economy,” he added, and for now data shows the sector is healthy, with freight customers managing risk by “front loading” consignments to get ahead of tariffs and reshaping their trading relationships.
“We’re seeing a deliberate shift in freight flows, away from the US but with more focus on APAC regional markets. A lot of it is within the region, and to and from China, India, Europe and Australia are all doing very well.”
But he cautioned that growth is moderating due to uncertainty.
The greatest impacts are in north Asian markets of China, Japan and South Korea, all of which have heavy flight flows to and from America, while South-East Asian carriers focus more on Europe and intra APAC.
Also ahead for airlines are disconnected APAC policies on decarbonising aviation with differing strategies, timelines and blending mandates for sustainable aviation fuel, widely considered the most immediate pathway to cleaner flight.
“The airlines are bearing the cost of transition when it should be the fuel companies,” said Menon. “Airlines are the users of the fuel, not the producers. Governments should take the load off the airlines.”
Now, more than ever, he warned, APAC carriers rely on the region’s governments to recognise the value of air transport for connectivity and both social and economic stimulation and apply what he calls sensible policies rather than growth-grounding taxes and regulations.
For example, he said, “EU261-type regulations” are creeping in, penalising APAC airlines for reliability failures which disrupt customers – failures not always of the airlines’ making.
“India is doing it. Thailand is doing it. Malaysia has done it, and to some extent Japan. And Australia is introducing new laws.
“If it is within their control, then of course the airlines have to take responsibility for disrupting customers. But not if it’s beyond their control.
“Governments should remember that aviation can be a cash cow,” said Menon of the economic dividends offered by air transport, “if you get the milking right.”
But he argued that the reverse will occur if carriers are penalised unfairly, with outcomes including higher costs and lower capability or willingness to invest in growth, which is already seriously challenged by supply chain disruption.
“Airlines are feeling the pinch,” said Menon. “With supply chain issues they’re not getting the aircraft. They’re not getting the engines. They’re not getting the parts.
“The main concern is that there doesn’t seem to be very meaningful headway being made in the supply chains. Everywhere you look, you see a wall. We need to see some movement on this.”
One avenue, he suggested, is for APAC governments to streamline safety evaluations and approvals for use of after-market parts to expedite aircraft maintenance and repairs, extend use of older aircraft to accommodate growth, and promote the circular economy.
While delays on new narrowbody aircraft are easing and APAC carriers are starting to receive their orders, widebody deliveries still face significant delays, in particular the Boeing 777-9, widely ordered by carriers across the APAC region, but now not due before 2027, seven years late. Engine issues, too, are impacting heavily.
“When you only have two big (airframe) suppliers, sooner or later this whole system is going to come unstuck,” said Menon. “We need breakthrough technologies.”
He highlighted “signs and opportunities” for industrial powerhouses including China, Japan and India to meaningfully scale up airframe and engine production and singled out US-based Jet Zero’s 250-seat, 5,000 nautical mile Z4 ‘blended-wing’ aircraft, the first flight of which is planned for 2027.
But that’s all big picture stuff for another day.
What’s next? Who knows? But Menon, who himself will step down from the role as director general at AAPA in April, is upbeat, expecting 10% average growth for APAC airlines in 2025, versus IATA’s estimate of 5.8% globally.
For now, at least, it’s azure skies ahead for APAC’s airlines.
