As the global aviation industry evolves, airlines are constantly seeking new opportunities to expand their networks and meet the growing demand. In our previous article Sleeping Giants: Untapped Aviation Markets with the Potential for a Reawakening, we analyzed the top 10 untapped aviation markets worldwide. This time, we will take a closer look at the Asian aviation market, specifically focusing on routes in Asia that have not yet been considered for direct services by airlines, despite having proven to attract a considerable number of passengers before the COVID-19 pandemic started in 2019.

Using origin-destination demand data from the BEONTRA Route Forecasting solution, we have compiled a table summarizing the top 10 untapped Asian aviation markets based on passenger volume in the past 12 months (June 2022 – May 2023).

In the following, we will focus on summarizing the notable trends we identified:

Los Angeles to Ho Chi Minh City leading the ranking: The route from Los Angeles (LAX) to Ho Chi Minh City (SGN) stands out as the top contender in our ranking, with 253,000 passengers (bi-directional) in the past 12 months. This represents a remarkable recovery rate of 95% compared to 2019 levels. While this route holds tremendous potential for a launch of a direct service, serving it poses unique challenges due to its substantial flight distance of approximately 13,200 km. If introduced, it would easily become one of the longest flight routes operated by airlines worldwide. Thus, it remains to be seen which airline will take up this challenge and tap into this promising market.

Huge potential for direct services to Bali, Indonesia: One striking observation from the ranking is the presence of Denpasar (DPS) in Bali in Indonesia, appearing five times. This indicates the significant untapped potential for introducing direct services to this popular destination. There is potential for direct flights from the Indian market, with major airports like New Delhi (DEL) and Mumbai (BOM), as well as from Europe, with London and Paris being the largest metropolitan regions and their respective hubs, Heathrow (LHR) and Paris Charles de Gaulle (CDG). Furthermore, there is also potential for a domestic direct service from Medan (KNO). It’s worth noting that the recovery rates for routes from New Delhi (DEL) and Mumbai (BOM) to Denpasar (DPS) have already surpassed 2019 levels, with recovery rates of 145% and 130% respectively.

Lagging domestic routes in Asia: Upon closer examination of the current recovery rates for the top 10 untapped Asian routes, it becomes apparent that domestic routes in Japan, but also Indonesia and China, are lagging behind. Their recovery rates are still way below 50%, whereas all international routes in the ranking have already recovered at least by 50%.

 An example of this is the domestic route from Kagoshima (KOJ) to Sapporo (CTS) in Japan, which has a current recovery rate of 22%. This highlights the fact that full connectivity has not yet returned to pre-COVID levels, especially for some of the domestic city pairs in Japan. While airlines are trying to restore their capacity and network, there are also domestic routes in other Asian countries such as in Indonesia or China, with the domestic route from Guiyang (KWE) to Shenyang (SHE) as one concrete example, even not appearing within the above ranking. This indicates that demand for some routes within China remains low, despite IATA projecting that domestic air travel in China will likely recover to its 2019 monthly level by summer 2023.

While the demand for international routes in Asia is already showing positive signs with promising markets for new direct flights, there is still catching up to do for domestic routes in several Asian countries in terms of passenger demand and volume compared to 2019 levels. It will be interesting to observe to what extend the potential of the untapped Asian routes will be unleashed in the coming weeks and months.

The recovery in air travel demand continues to be strong and resilient in 2023, notwithstanding the resurgent economic headwinds, manifold current challenges such as high inflation rates or tight labor markets, and, along with this, high levels of uncertainty when looking ahead.

The rebound of global air passenger traffic is underpinned by the latest published recovery rates, measured in revenue passenger-kilometers (RPKs), which rebounded “to 85.9% of pre-pandemic levels [in the first quarter of 2023 vs Q1 2019], signaling a significant improvement from the previous year”.

While this is certainly encouraging news, we wanted to identify if there were still any “sleeping giants”: aviation markets that have not been considered yet by airlines to be put back into operation even though they have already been proven to generate PAX demand pre-COVID in 2019.

Using origin-destination demand data from our BEONTRA Route Forecasting solution, we created the following table summarizing the top 10 untapped aviation markets ranked by their PAX volume in the latest 12 months (April 2022 to March 2023). For this list of sleeping giants we only considered markets which are currently unserved but had at least one direct service in 2019.

In the following, we will take a closer look at three of the 10 outlined markets to better understand their respective market conditions, competitive situation and whether there are specific reasons for this delayed recovery; also, what the latest market trends are, e.g., in terms of any upcoming, already announced relaunches later in the year.

Sacramento (SMF) – Orlando (MCO)

The route Sacramento (SMF) – Orlando (MCO) leads the ranking with 115,000 passengers (bi-directional) in the latest 12 months and a current recovery rate of 72% compared to 2019.

This route was exclusively operated by Southwest Airlines with one daily non-stop service back in 2019. Currently, there is no carrier in sight planning to resume this service. Passengers currently travelling between these airports require at least one stop, for example in Denver (DEN) or Austin (AUS) when flying with Southwest or in Salt Lake City (SLF) when using Delta Air Lines.

When taking a closer look at the catchment area of Sacramento we see that United Airlines is offering double-daily and Alaska Airlines daily non-stop services to Orlando from San Francisco (SFO), which is 137 km away from Sacramento. The capacity on the SFO-MCO route is close to what the two airlines have offered pre-COVID in 2019.

Lahore (LHE) – Manchester (MAN)

The route Lahore (LHE) – Manchester (MAN) comes second with 104,000 passengers (bi-directional) in the latest 12 months, reflecting a sharp rebound with a current recovery rate of 104%, already exceeding pre-COVID levels. Due to the lack of a direct service, passengers currently need to travel with a stopover. Most travelers fly via the Middle East by the known ME3 carriers – Qatar Airways (via DOH), Emirates (via DXB), Etihad (via AUH) – as well as Saudia (via JED) and Turkish Airlines (via IST).

In 2019, this route was exclusively operated by Pakistan International Airlines twice per week, but the service has not been resumed so far.

Sao Paolo (GRU) – Los Angeles (LAX)

Unlike the outlined routes above, the route Sao Paolo (GRU) – Los Angeles (LAX), which has had 96,000 passengers lately, will be resumed by LATAM Airlines in August 2023 with three weekly frequencies initially. It will also be one of the first routes of their Joint Venture with Delta.

This route was operated non-stop by American Airlines pre-COVID with almost the same monthly capacity of ~10,000 seats that will be offered by LATAM from August onwards, operating a Boeing 777-300.

The number of airlines offering connecting services between Sao Paolo – Los Angeles via another hub has steadily increased after the pandemic. LATAM’s new direct services will have to compete with several indirect flight options, for example, offered by United Airlines via Houston (IAH) or Chicago (ORD) and American Airlines via Miami (MIA) or Dallas (DFW).

It will be interesting to follow the ongoing recovery in air travel demand and observe which of the ‘sleeping giants’ we outlined in the above will be revived in the coming months apart from the Sao Paolo (GRU) – Los Angeles (LAX) route.

Since the announcement of Riyadh Air on 12 March 2023, the new airline is a hot topic within the travel and aviation industry. The airline will be operating from Riyadh Airport as its hub and aims to serve over 100 destinations around the world by 2030. This announcement prompted us to have a closer look at the already competitive situation in the Middle East and to draw up a comparison between some of the big players in the region. 

The map at the top visualizes the destinations of the flight schedule for June 2023 and highlights destinations served exclusively by one carrier. This makes it easier to identify the strategies the individual airlines pursue.

When studying the map it becomes obvious that Etihad and Saudia seem to be positioned more in the conservative camp, serving the major hubs and regionally dominant airports. With Nagoya (NGO), Etihad claim exclusivity to only one destination. This statement also applies to Saudi Airlines, which have only one exclusive international destination in their portfolio, Lucknow (LKO) in India. This aside, Saudi Airlines focus on their domestic market, and partly on the markets in the neighboring countries (i.e., Sharm el-Sheikh (SSH) in Egypt).

Considering the markets exclusively served by Qatar Airways, the network shows a strong focus on destinations in Southeast Europe, Turkey, the Caucasus, India and Africa. Secondary airports, such as Sarajevo Airport (SJJ), Belgrade Airport (BEG) or Sofia Airport (SOF) are also served, which strongly contributes to that regional densification. These are markets to which Emirates apparently do not claim any market share (which, however, could also be at least partly due to Emirate’s fleet comprising widebodies only). The markets that Emirates serve exclusively are exactly outside the “Qatar Airways corridor”. Not surprisingly, Emirates focus on the bigger airports in the respective countries and regions (i.e., Mexico City (MEX) in Central America, Buenos Aires (EZE) and Rio de Janeiro (GIG) in South America). 

With four major airlines, the Middle East including Saudi Arabia is already perfectly connected to the world. Not only are the major hubs served, but also niche markets. Riyadh Air’s mission is to “provide tourists from around the world the opportunity to visit Saudia Arabia’s cultural and natural attractions” – we are curious to see which strategy will be adopted to achieve this goal.

The unique location of its hub Keflavik Airport enables the Icelandic startup PLAY Airlines to connect Europe and North America with its A320 neo fleet. The recent announcements of many new PLAY routes have inspired us to take a closer look at PLAY’s hub schedule – we wanted to discover which European airports are in a geographical position to allow for transatlantic connectivity via Keflavik.

We therefore analysed the bank structure at PLAY’s hub in Keflavik. PLAY Airlines serves New York’s Stewart International Airport and four additional markets on the east coast of North America on a daily basis. During summer, transatlantic flights arrive at KEF between 04.20 AM and 5.00 AM and depart between 02.50 PM and 3.30 PM. The below illustration shows how the time window for a flight rotation between KEF and other European airports has been determined, considering a minimum connecting time of 45 minutes.

In order to connect from and to North America, a rotation must not leave KEF before 05.45 AM and must arrive back no later than 02.05 PM. This time window of eight hours and 20 minutes allows PLAY to reach European airports in a range of approximately 2,500 kilometers, which is the area we have marked in the map as the “high potential zone” (please refer to header image).

Airports in the high potential zone have the advantage that PLAY can establish a rotation between these airports and KEF on the same day. For example, KEF – BER (2,400 km) is currently the longest already served route in the high potential zone. As we can see from the below illustration, the flight schedule gives passengers the opportunity to connect from and to North America both ways.

Nonetheless, PLAY also serves routes outside the high potential zone. For example, KEF – PRG (2,700 km) is also served with a rotation on the same day. However, this rotation does not provide connectivity to the transatlantic destinations, unless travelers combine the trip with a stay in Iceland.

There are even significantly longer PLAY routes, such as KEF – ATH. However, due to the stage length of 4,200 kilometres, the plane arriving in Athens in the afternoon does not head back to KEF before the next day. This flight schedule has the advantage that it again provides transatlantic connectivity. On the other hand, the long ground time at ATH decreases aircraft utilization compared to shorter routes.

Those examples illustrate that airports in a 2,500 km radius from KEF have the highest potential to benefit from PLAY’s North American network.

Of course, geographic location alone does not make for a successful route launch. Airports using BEONTRA’s Route Forecasting solution can assess market size, yield, connectivity and more to determine the potential of a new route and to build an airline business case.

Find out more at www.beontra.com/solutions.