By Victor Vieira, Marketing Director for Commercial Aviation Asia-Pacific

As we head into the second quarter of 2021, we continue to see airlines in Asia-Pacific grapple with the ongoing impact the pandemic has had on travel demand. While the vaccine programmes have injected optimism worldwide, the unlikely situation of a V-shaped recovery is almost an understatement. According to IATA, international passenger demand in January this year was 85.6 percent below January 2019, a further drop compared to the 85.3 percent year-to-year decline recorded in December 2019.

How long will it take for us to get back to the historical growth trajectory seen before 2020, if at all? Should we use pre-COVID levels as an indicator for “normality”? Bear in mind, the situation pre-COVID was not all that rosy for airlines – in Asia, profit per passenger was averaging US$3 in 2019 after years of continuous decline, along with the proliferation of low-cost carriers in the region.

While demand for domestic tourism and short distance VFR traffic (visiting friends and relatives) continues to recover, the demand for long-haul flights has dissipated. Looking at business travel, companies are now much more aware of the clear benefits of telecommuting and teleconferencing, so less business passenger traffic is to be expected in the foreseeable future.

It is increasingly clear that domestic connectivity – or regional connectivity in the case of small states like Singapore – will lead to the recovery in air travel demand. Strategically re-establishing connections and frequencies will be a more important long-term metric in the new normal than the traditional metric of traffic volumes. In that respect, we believe that smaller and efficient narrowbodies with a capacity of up to 150 seats will be at the centre of recovery. Smaller, right-sized aircraft are the best way to resume or grow domestic and regional connectivity at a time when overall passenger demand has weakened.

It is a crucial tool in an airline’s aircraft fleet, giving its network planning department the flexibility to cope with fluctuations in demand for air services, while strategically increasing the number of connections as demand and passenger numbers grow. The move towards the increased utilisation of smaller narrowbodies has started. Globally, 80 percent of the E-Jets fleet is in operation as of January 2021 and in Asia-Pacific, it stands at 90 percent.

Looking at China, which is leading the aviation sector recovery in Asia, the increased use of smaller aircraft on their domestic routes has been key to the resurgence of domestic air travel growth in a relative short period of time. Smaller narrowbody jets flew 13 percent more flights in the fourth quarter of 2020 than in the same quarter of 2019, while widebodies saw a 44 percent decline in flights performed during the same period.

We see the rightsizing of fleet and operations by marquee airlines such as Japan Airlines, Qantas, KLM and United Airlines. In the fourth quarter of 2020, airlines in Japan continued to operate 227 destinations domestically and internationally – a slight drop from the 255 in the same quarter of 2019. This was achieved by using the existing fleet of smaller jets and turboprops, while there was a 67 percent drop in large widebody flights and a 37 per cent reduction of bigger narrowbodies.

In Australia, where most operations in 2020 were largely domestic, airlines have reduced the average aircraft size in service, from an average of 161 seats per departure in the fourth quarter of 2019 to just 120 seats per departure in the fourth quarter of 2020. Qantas recently announced the operation of the E190 in partnership with Alliance Airlines as part of its “the right aircraft on the right route” strategy.

Looking beyond the region, in 2020, KLM’s fleet of E-Jets performed 85% of all flights operated by the airline. KLM recently added its 50th E-Jet, its first E195-E2, highlighting the importance of right-sized jets. One out of three flights operated by Japan Airlines, United Airlines and Lufthansa is offered by E-Jets.

There is always a need for large widebodies – for long-haul travel and cargo transport. Hub-and-spoke systems will continue to be of paramount importance after COVID-19. However, airlines will need to search for the most efficient structure to fill the seats on their international flights amidst a lower-demand environment. This is why the current situation calls for smaller narrowbodies to “step up” in order optimise airline operations.

Smaller narrowbodies provide airlines the flexibility to place the aircraft on strategically important routes where demand is currently thin. As the situation changes, the airline can scale up capacity by increasing flight frequency or switching to a larger aircraft in its fleet.

The up-to-150 seat segment is here to stay and is not just a passing trend for the current downturn in the airline industry. It offers lower operating cost, all the more imperative especially nowadays with the depressed passenger demand. It is an asset that will unlock opportunities for airlines to open up connections to more cities and this will benefit travellers.

In addition, these non-stop point-to-point connections within the region would provide travellers more options to shorten their travel time by bypassing unnecessary transits through hubs. Everybody wins – shorter travel times, more manageable passenger movements at gates and onboard the aircraft, and less load on airport infrastructure.

It will take time before passenger demands returns to the volumes that will bring back the fleet of large aircraft that are presently parked in storage. Until then, airlines can keep operations cost effective by having smaller narrowbodies adapted to the prevailing market conditions and strengthening domestic and regional connectivity.