Asia Pacific airlines brace for ‘considerable headwinds’
Demand for air travel will continue to grow this year, but geopolitical tensions and tariff uncertainties will weigh on Asia Pacific airlines’ finances, according to a report.
In a statement, the Association of Asia Pacific Airlines (AAPA) said air carriers in the region recorded “strong growth” in passenger traffic, coupled with the recovery in cargo volumes, leading to $7.3 billion in combined earnings for 2024.
However, for 2025, airlines would experience “considerable headwinds,” particularly higher operating costs and supply chain disruptions.
“Geopolitical tensions may lead to renewed volatility in oil and currency markets while air cargo markets may soften further, as uncertainties over trade negotiations dampen demand for air shipments,” Subhas Menon, AAPA director general, said in a statement.
The recent conflict in the Middle East involved the almost two-week war between Israel and Iran, triggering a spike in global oil prices. The United States’ involvement in the conflict, attacking Iran’s nuclear sites, worsened the fears of investors.
While pump prices had cooled down in the past two weeks, the attacks launched by Houthi rebels on cargo ships at the Red Sea have emerged as one of the factors that could lead to an increase in petroleum product prices this week.
Cargo volume slump
The current trade situation, heavily influenced by US tariff policies, can also lead to a slump in cargo volumes or sour the global growth outlook.
“Nevertheless, air passenger demand is expected to remain relatively resilient, amidst continued growth in the region’s economies,” Menon said.
He also noted that air carriers had been “actively refining their business strategies, maintaining cost discipline while pursuing new revenue streams.”
“At the same time, carriers are investing in fleet modernization, digital innovation and enhanced service offerings to deliver a high-quality travel experience,” the official added.
True to this, major local players Philippine Airlines, Cebu Pacific and AirAsia Philippines have committed to boosting their fleet with new-generation aircraft.
