Airline executives are bullish on the mid- to long-term recovery prospects in Asia-Pacific, but are charting the return to capacity and growth in a more cautious manner amid current constraints in supply and economic headwinds. During a panel session at the Aviation Festival Asia 2022 in Singapore, airline executives acknowledged that the pandemic had recalibrated airlines' appetite for risk but had not dampened the fundamental drivers of their business in Asia-Pacific. "If you go back in history, for half a century, the aviation industry has been through oil shocks and wars and terrorism but has doubled in size every 15 years despite all that," says Air India Express chief executive Aloke Singh. "Although the growth has slowed in mature markets, but in our part of the world there is lot of headroom for growth. "While there may be [pretty serious] challenges in the short term that you cannot just wish off, when you take the mid- and long-term view, we are absolutely bullish. The fact is that the key drivers of our business are intact." Malaysia Airlines group chief executive Izham Ismail concurs: "We are bullish on the future, but in a cautious manner and are selective in the market and customer segments we want to explore. If we go back to where we were before Covid, to a market full of overcapacity, [it would be very tough] to drive profitability." AirAsia Malaysia chief executive Riad Asmat echoes the sentiment of cautious optimism, citing the opportunities in the size of the ASEAN market. "There's a demand of sorts after two to three years, be it for leisure or business. AirAsia and other airlines see the opportunity right in front of us. It's now just a matter of whether we are prepared to grab it in the right way and the right manner with the partners." He notes the airline has seen a "real uptick on movement" up to 50% of pre-Covid levels and has activated about 40 aircraft out of the 100 in its fleet. However, he highlights that "airline executives are more focused on the risks you're facing if you flood capacity to market". He cites areas such as cost and ability to fill up seats. Constraints in manpower is a short-term issue airlines are facing across the board. Ismail says: "We see there is pent-up demand, but supply to the market is not [able to be restored] in a blink of an eye and this is constraining the aviation industry. We face issues of resources and putting the airplane back into the sky. "[To] make matters worse, the inflation is real and coming our way, the fuel and forex are strong headwinds to the industry." Airlines are grappling with the high pent-up demand for travel in a very complex environment, says Ismail, and have not been able to put capacity back as quickly, driven by acute shortages in manpower from pilots to cabin crew and baggage handlers. Ismail says resources will be a challenge in the next six to 12 months, noting that these are issues airlines in Europe and North America are facing. However, against this backdrop of capacity recovery, Ismail cautions against the danger of airlines going back to the same issue of inducing "too much capacity in the marketplace". Asmat notes there has not yet been too much reluctance from aviation workers to come back. AirAsia Malaysia has been planning its manpower needs for the next six to eight months in view of demand, targeting the year-end to be at full strength. Singh points out that while there is available talent, training manpower requires time. "Licensed and trained manpower cannot be produced overnight. We are working with regulators and this will take at least six to 12 months the time," he says. The executives concur on the bright prospects in India. "India is very exciting, in the next five years moving forward. It's a space everyone should watch. The activities happening in the home ground is very interesting," Ismail says. Commenting on the opportunities for expansion, Singh notes: "In the short-haul international market, which is the space that we're in, the numbers are large, about 45 million according to our estimates if you look at a radius of about six hours to and from India. "We feel that the potential has still not been exploited to the extent that it could. Two-thirds of that is towards the west, the Gulf and the Middle East and one-third is Southeast Asia. In this part of the world, we haven't yet scratched the surface and there is enormous room to grow." Asmat notes India is a very crucial market for Southeast Asia, but notes that connectivity here is "very limited". "In reality, the market is up for the taking, there's a lot of downs and negatives, I hear it almost every day, but we look at it from the perspective of opportunities," he adds.

The prospect of industrial action at British Airways has risen sharply after members of the Unite union overwhelmingly voted in favour of a motion backing strikes this summer. In a poll, 97% of BA staff balloted backed strike action, says Unite, which represents 16,000 staff at the airline. Although a consultative ballot that was undertaken by the union to seek the views of its members, and not a vote on whether to imminently launch action, the move underlines that threat of strike action has increased at BA and for airlines across Europe. BA is currently facing conflict with its staff in a number of areas, but pay is at the heart of the issue. Unite is currently holding a separate vote on industrial action with around 500 members that will run to 27 June. Strikes are set to follow during July, should they vote in favour. Meanwhile, the GMB union is balloting check-in staff about strike action with a similar timeframe. "To anyone that has flown on British Airways recently, this overwhelming consultative ballot result will come as no surprise," says Unite. "British Airways management now can no longer ignore the universal discontent across their own workforce, in the way they have ignored the needs of their own customers. BA customers know first-hand that the airline is in chaos and that service levels are suffering as a direct result of its own previous disastrous 'fire and rehire' policies."
Unite says many of BA's Heathrow staff took pay cuts amid the Covid-19 crisis as revenues dried up but are now angry that this has not been restated, especially given that management pay has been returned to pre-pandemic levels. BA responds that the result of Unite's ballot is "disappointing", although "not surprising given the issues across the transport sector". Airlines have found themselves in a difficult position in recent months regarding staffing. Having shed many positions amid the pandemic, they are now trying to recruit into a strong labour market which is hindering their ability to staff up. Meanwhile, Covid-related absences have also impacted operations. This, combined with a surge of passengers desperate for their first break in years, plus staffing problems at airports and elsewhere, has already led to significant delays and numerous cancellations in Europe, the UK and the USA. During its results presentation earlier this month, BA's parent IAG revealed that it would cancel roughly 60 flights per day at Heathrow, or 10% of its total at the hub, until October, reflecting a lack of operational capacity. Ryanair and Brussels Airways are also facing the threat of strikes this summer following disputes with staff.

LATAM Airlines Group has secured financing commitments for a proposal that could enable it to exit US Chapter 11 bankruptcy protection. The Chile-based group's exit financing proposal is subject to approval by the bankruptcy court for the Southern District of New York. JP Morgan, Goldman Sachs, Barclays, BNP Paribas and Natixis have agreed to grant exit financing to LATAM, the airline group states in an 11 June Securities and Exchange Commission filing. LATAM filed for Chapter 11 in May 2020, and in March 2022 received the green light from the bankruptcy court to begin soliciting votes from creditors for the approval of the reorganisation plan filed in November 2021. The court on 17-18 May held a confirmation hearing on LATAM's reorganisation plan. The group has previously disclosed that it seeks to raise $8.19 billion in the form of new equity, convertible notes and debt, to enable it to exit Chapter 11 in 2022.