Domestic airline networks to lead post COVID rebound

MANILA, Philippines — With the coronavirus disease 2019 or COVID-19 pandemic placing many carriers on the brink of collapse, airlines with a strong domestic network are seen having higher chances of recovering faster than those with none.

In a report, Aviation think tank CAPA-Center for Aviation  said Asia Pacific airlines with strong domestic networks would have an early advantage once the COVID-19 crisis subsides.

“Although having domestic routes will not guarantee success, they should provide a valuable foundation for many airlines’ eventual recoveries,” CAPA said.

“Domestic networks should provide the first rung on the ladder to recovery for many Asian airlines,” it said.

While international travel was the first to be hit, CAPA said COVID-19 has caught up with many domestic networks as governments shut down internal movement as well.

“But domestic networks can be expected to return sooner  and demand should also rebound more quickly,” it said.

CAPA said airlines in the region relying on international connecting traffic would likely have to wait longer for their rebounds to begin as long haul routes could take some time to be fully re-established.

However, the global market intelligence firm said that simply having a domestic network is not enough of an indicator by itself to guarantee a strong recovery.

It said some airlines with domestic operations are in a shaky financial condition and may still struggle to bounce back quickly.

“Of course, flying more domestic seats does not mean they are full. Load factors are down significantly for most airlines, and will likely remain so for some time,” CAPA said.

“But the experience in China is a welcome sign that domestic capacity — and demand — should return faster than international traffic. This will give hope to the airlines that had strong domestic networks before the pandemic struck,” it said.

Among local carriers, budget carrier Cebu Pacific has the most extensive domestic network.

Cebu Pacific operates a network serving 72 domestic routes and 41 international routes with a total of 3,376 scheduled weekly flights as of end 2019.

Philippine Airlines, the country’s flag carrier, has a network covering more than 30 domestic and 40 international destinations. It operates 125 domestic flights daily.

AirAsia Philippines, for its part, has 23 domestic routes covering 12 domestic destinations.

The International Air Transport Association, in its latest assessment, said passenger demand in the Philippines could be reduced by 36 percent this year, resulting in a revenue loss of $3.51 billion among carriers based on a scenario where severe restrictions on travel are lifted after three months and followed by gradual recovery.