Although the demand for travel in the Asia-Pacific region has rebounded from the pandemic, industry officials believe that ongoing supply chain problems are negatively impacting airline profits and exposing them to stricter consumer protection laws. As the aviation sector recovers, there has been a shortage of new aircraft, labor, and components, and the demand for repairs on the latest engines has exceeded expectations. At the annual meeting of the Association of Asia Pacific Airlines (AAPA) in Brunei this week, Subhas Menon, the director general of the trade group, stated that the supply chain issue is the industry’s biggest challenge at present. Airlines are being forced to suspend flights, relocate parts, and rent temporary engines or aircraft to maintain operations due to record turnaround times for engine maintenance.
Thai Airways (THAI.BK) CEO Chai Eamsiri noted that maintaining Rolls-Royce (RR.L) engines for their Boeing (BA.N) aircraft has become increasingly challenging. What used to take around three months for 787 jets now requires approximately six months. “The airplane has to be stretched,” he told Reuters. “We used to operate 12.5 hours a day, but now we have to extend it to over 13 hours.” Major airline executives, including those from Thai Airways, Singapore Airlines (SIAL.SI), Malaysia Airlines, and Kazakhstan’s Air Astana (AIRA.KZ), have expressed their frustration with maintenance schedules and have requested that governments review consumer protections without placing the blame solely on airlines for delays. “The supply chain is the primary problem. However, we are the ones dealing with the customers,” Eamsiri explained to the group. Although the regulations are not as stringent as EU regulations requiring compensation for affected passengers, countries such as Malaysia, Australia, Thailand, and the Philippines are enhancing airline consumer protections to mandate refund options in cases of delays and cancellations, similar to practices in the United States.
Peter Foster, CEO of Air Astana, emphasized that aviation manufacturers “need to get their act together.” Malaysia Airlines has faced a series of service disruptions this year and reduced its network capacity by 20% starting in September due to a shortage of aircraft, labor, and spare parts. As a result, Malaysia’s civil aviation regulator shortened the lifespan of the airline’s air operator certificate from three years to one. “All airlines are putting pressure on our suppliers,” Izham Ismail, CEO of Malaysia Airlines, told attendees. Engine maintenance, which once took about 55 days, now takes 100 days or more, according to Ismail. Representatives from Rolls-Royce and Airbus (AIR.PA) stated separately that they are working to address supply chain issues by facilitating suppliers’ access to financing. Due to the delayed easing of pandemic travel restrictions, particularly in China, travel in the Asia-Pacific region—accounting for about 32% of all global passenger traffic—recovered later than in other parts of the world. According to AAPA data, the average passenger traffic for 40 Asia-Pacific carriers in September reached 97.5% of levels from the same month in 2019. While demand for airlines remains strong worldwide, as the post-pandemic travel boom wanes and most planes return to service, ticket prices are declining. Despite robust travel demand, Singapore Airlines, a regional benchmark, reported a 48.5% drop in interim net profit last week, reflecting fierce competition and indicating that its earnings will continue to be under pressure.
