JAKARTA (TheInsiderStories) – Indonesia AirAsia temporarily suspended all domestic operations starting April 1 to 21, 2020, and international routes until May 17, 2020 to support the government’ efforts to contain the spread of COVID-19. The other reasons, the economic situation has become more challenging and the virus outbreak has affecting demand for domestic and international air travel.
“By considering these factors carefully and deeply, the company is forced to suspend international and domestic flights until the situation improves, and demand for air travel picks up,” says AirAsia Indonesia in a written statement.
It said, the measure will certainly have a significant influence on the company’ operating and financial performance in the first half of 2020. Over the next six months, the priority of the aviation company is to reduce its operating cost base by renegotiating with suppliers and key stakeholders, it says.
According to Rajiv Biswas, an economist at IHS Markit, the Asia Pacific (APAC) commercial aviation industry is being hit by a massive economic shockwave from the escalating novel coronavirus crisis sweeping across the region.
The virus crisis has become a “Black Swan” event for the APAC commercial aviation industry, as Chinese travel to the rest of the Asia-Pacific has collapsed due to government travel bans, forcing many airlines to temporarily cancel their flights to mainland Chinese cities until the epidemic is contained.
The APAC commercial aviation industry has become increasingly dependent on mainland Chinese tourism and business travel over the past decade. Many Asian airlines had established direct flights to second-tier and third-tier Chinese cities due to the boom in Chinese outbound tourism.
As a result of the pandemic and travel bans imposed by many governments, there have been widespread cancellations of scheduled flights between many APAC countries and mainland China announced for February and March. Consequently, many APAC airlines have become increasingly vulnerable to such an unpredictable “Black Swan” event where Chinese travel has completely collapsed.
Countries that have imposed stringent travel bans on visitors from China include Japan, Australia, India, Indonesia, New Zealand, Philippines, Singapore and Vietnam. However, so far Malaysia and Thailand have imposed more limited restrictions on Chinese visitors, with no overall travel ban yet.
Chinese airlines are feeling the brunt of this economic shock, with their international flights to many international destinations having been heavily disrupted. In Japan, flights from 13 regional Japanese airports to and from China are being suspended due to the coronavirus, with significant reduction in flights to China from the largest Japanese international airports, Narita and Haneda airports.
In the ASEAN region, Vietnam and Indonesia have suspended all flights to mainland China. A number of airlines in the Philippines have also suspended all flights to mainland China, Hong Kong SAR, Macau SAR and Taiwan, which has further increased the negative impact on the tourism industry in those economies. Taiwan itself has introduced new travel restrictions applying to visitors from Hong Kong SAR and Macau SAR.
Fears about the spread of the COVID-19 have also resulted in increasing cancellations of conferences and other events being held in the APAC region, with reduced attendance for conferences that are still going ahead in conference hubs, such as Hong Kong SAR and Singapore. International business travel within the APAC region and travel from other continents to the region have also been heavily curtailed due to the coronavirus epidemic.
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