After the pandemic, airfares skyrocketed in many regions around the world. In particular, fares in the Asia-Pacific region increased the most, increasing by more than 33% over the same period in 2019. They increased by 17% and 12% in North America and Europe, respectively.

The problem arises when North American and European countries have already relaxed border restrictions, but many Asian countries such as China and Japan have just reopened recently. The aviation industry of these countries has been strongly hit and is now in the recovery phase, so ticket prices are high.

According to Trip.com, in China only, despite increasing airfares, the high demand boosted revenue from domestic tourism during the May Day holiday up by 101% compared to before the pandemic, with about 274 million trips. Outbound travel also hit the highest in three years, with flight bookings soaring by nearly 900% compared to the same period last year.

Although the demand for air travel is high, the supply is facing many difficulties because of the shortage of labor resources. Many airlines are cutting staff like unskilled workers and pilots. The closure of Russian airspace and rising fuel prices also contributed to the sharp increase in fares.

Many major airlines have not been able to operate at full capacity due to supply chain bottlenecks. Sanctions related to Russia also make it difficult for Airbus, Boeing and suppliers to find materials for manufacturing, causing high prices.

Low-cost airlines have yet to reopen their existing flight routes. At the same time, Alitalia, Air Namibia, Flybe, and 61 other airlines went bankrupt during the epidemic.

In this situation, airfares are forecasted to increase continuously until 2024.

Pacific Asia Travel Association (PATA) has proposed scenarios of international tourist recovery in the coming times. Following a sharp increase in annual international arrivals in 2022, prediction suggests that growth will peak in 2023 before slowing down by 2025. It is because the pent-up travel demand is gradually released.

In the “Asia Pacific Visitor Forecasts 2023-2025” report for 39 destinations, PATA forecasts visitor numbers will be back to pre-COVID-19 levels by 2023. In the worst scenario, it may not be until the end of 2025 that the number will still be 12% below 2019 levels.

Forecasts for the Asia-Pacific region (2023-2025) show that the number of international visitors will increase significantly. However, it depends on many factors including the situation of each destination. For instance, the annual growth rate of international arrivals to Asia is predicted to be 254% by 2023 under the best-case scenario, 171% under the medium scenario, and 127% under the worst one. The numbers are based on the fact that China is gradually reopening to domestic and outbound tourism.

Other destinations of the Asia-Pacific region are not expected to grow as strongly as Asia. Nevertheless, the growth rate will reach a remarkable speed and remain positive throughout the 2023-2025 period.

 

Despite the positive signals in the latest forecast, PATA President Peter Semone said challenges remain. They include variants of the SARS-CoV-2 virus, the global economic downturn, persistent geopolitical or trade wars, and climate change. Besides, he also said that growth in Asia-Pacific destinations is not the same as there are still local disruptions. Another important thing he pointed out is the change from merely marketing the destination to assessing visitor needs in a responsible and sustainable way. Finally, he emphasized the human resource for the tourism industry greatly affected by the pandemic. Getting them back to work is difficult, unless working conditions are improved.

With the strong recovery in 2022, regions in the world are resuming tourism as international traffic increases. International tourism is expected to keep recovering in 2023. However, tourists will consider spending less and choose a close destination in the current economic impacts and challenges.

The recovery of regions

According to UNWTO latest data in the “World Tourism Barometer” report, more than 900 million people traveled overseas in 2022, twice over 2021. Although it is just 63% compared to 2019, in general this is a positive signal of recovery. All regions recorded a rebound in international arrivals, especially the Middle East (up 83%) and Europe (up 80%). In contrast, the Asia-Pacific region was the slowest to recover, reaching only 23% as countries in this region lifted COVID-19 restrictions recently. In addition, it was also somewhat affected without China, the large market which closed to implement the zero-COVID policy in a long time.

The tourism industry keeps recovering in 2023

International tourism is forecasted to continue to recover in 2023 due to prolonged pent-up demand, especially in Asia Pacific.

Based on UNWTO scenarios, the number of international tourists this year could reach between 80% and 95% of pre-pandemic levels. The Middle East and Europe are expected to reach or exceed pre-pandemic levels, following a strong recovery in 2022. In the Asia-Pacific, the opening of source markets will underpin the recovery in 2023. Most notable is the lifting of COVID-19 restrictions in China, the largest outbound travel market before the pandemic. Overall, this is good news for Asian destinations. Nevertheless, lately, the Ministry of Culture and Tourism of the People’s Republic of China announced that it would initially allow the reopening of tours to 20 countries, including Southeast Asian countries such as Thailand and Indonesia. So the full return of this market will be slower than initially forecast.

 

Challenges remain

Economic, health concerns as well as geopolitical tensions will affect the recovery of international tourism. According to surveys from experts, economic challenges such as inflation, interest rate hikes, and concerns about recession will have a great impact on the tourism industry. That’s why tourists will consider their spending for travel.

Outbox’s latest survey of some markets in Northeast Asia also shows that travelers will consider the cost and length of trips due to financial and health concerns. They also prioritize choosing closer destinations to save costs and reduce health risks. Moreover, geopolitical tensions, health issues related to COVID-19 and workforce shortages are also factors affecting the recovery of international tourism in the coming time.