Asia Travel Re:Set #7 – 20 Events That Shaped the 2020 Travel Year: Part I
"To revitalise the economy, it is indispensable to resume international travel"
Hello. Welcome to the Sunday edition.
This week marks 9 months since the WHO was alerted to a spate of “viral pneumonia” cases in Wuhan, China.
The date was 31 December 2019.
So where are you placing your money as we enter Q4 of 2020?
Who or what is going to guide Asia Pacific (or significant parts of the region) away from COVID-19’s vicelike grip on border policies?
Politicians? Public Health Experts? Big Pharma? Multilateral Organisations? The Travel Sector? China? Japan? Singapore? Vietnam?
The answer to this question is almost as cloudy now as it was in January, when the coronavirus took flight across China, through Asia and beyond.
The giant button pausing life as we all knew it appears no nearer to being released “until there is a vaccine.”
An inevitable response to the current tide of thought is that Big Pharma will arise triumphant. But Big Pharma is by no means a singular entity.
The WHO lists 40 candidate COVID-19 vaccines that are “in clinical evaluation.” A further 149 are “in preclinical evaluation.”
Securing access to purchase, distribute and manufacture under license any vaccine that completes clinical trials is already a weighty political issue. Public health experts are starting to comment on how this process may tangle, or even unravel.
So, this week I’ve mined the 2020 backstory in search of clues to chart a path forward.
Thanks for jumping onboard.
Gary
The Weekend Itinerary
Dashboard 2020
Travel Snapshots
Updates from Issues 5 & 6
China’s October National Holiday
Japan and the 2021 Tokyo Olympics
The 20 Events That Shaped Asia’s Travel Year: Part I
Feedback
"To revitalise the economy, it is indispensable to resume international travel," Yoshihide Suga, Prime Minister of Japan
Dashboard 2020
32,880,857: Official number of COVID-19 cases worldwide
994,810: Official number of COVID-19 deaths worldwide
118,000: Official number of COVID-19 cases on 11 March, when the WHO confirmed a pandemic
95: Days remaining of 2020
49: Days since the 2020 Tokyo Olympics were due to finish.
“The pandemic has highlighted global unreadiness for responding to a virulent public health hazard, and reaffirmed that political noise often drowns out scientific reason.“
[Image & Data Sources: Johns Hopkins University of Medicine Coronavirus Centre & WHO]
Travel Snapshots
Evaluating COVID-19 Strategies in Asia Pacific & Europe
Is 2020 the year when scientific papers became the only reliable way to understand a horribly confused world? Scientists would, of course, point out that ongoing research has always suggested life-changing solutions – but that these rarely reach a wide audience. This year is different. The pandemic has highlighted global unreadiness for responding to a virulent public health hazard, and reaffirmed that political noise often drowns out scientific reason. This excellent paper by an elite group of global public health experts evaluates various coronavirus containment strategies in Asia Pacific and Europe.
And it’s beautifully written:
“It seems intuitive that a country should not open up until it has a surveillance system of high quality in place and has confirmed that infections are being suppressed. Unfortunately, as shown in several countries, this principle has often been disregarded.”
Read here
Singapore Aims to Avoid Rapid Test “False Negatives”
Singapore has stated that it wants to progressively ease border restrictions, initially by focusing on business travel. It is also working on inbound protocols to reboot its lucrative MICE sector. With the 14-day quarantine safety net remaining a stubborn disincentive to travel, attentions are focused on COVID-19 rapid testing. In the absence of global standards, travellers, airlines, airports and public health authorities understand that rapid diagnostic test results have delivered variable rates of accuracy, or – as this excellent article from Straits Times – points out, “False Negatives”.
Well worth a read. Here.
Updates from Issues 5 & 6
Although most Asian borders are closed, travel activity behind the scenes is frenetic. So, each Sunday, I’ll provide updates on the previous week’s newsletter stories.
Issue 5
China’s Domestic Tourism “In Recovery” – Or is it?
Regular readers know that I’ve been tracking the media hype around China’s domestic travel-only October National Day Holiday, which begins this week. Last year, 782 million domestic trips were officially recorded. This year, despite initial claims that a new record total may be set, Chinese state media has rolled down its estimate. The latest forecast is 600 million trips during the 8-day break. While, by any standards, that is an enormous volume of travellers for one – albeit vast – country, it marks a 23% shortfall from the 2019 October holiday, and suggests that travel confidence in China is still recovering after the shape-shifting events earlier in 2020.
Issue 6
What’s Next for Japan’s Olympic Dream?
With 299 days to go until the flame is lit to open the delayed 2021 Tokyo Olympics, conjecture continues about whether the Games will take place. Some new details emerged this week. Tokyo 2020 President Mori Yoshiro said that the organisers and the International Olympic Committee had "established a broader direction that the Games in 2021 should be simplified." Specific details of these "simplifications" have yet to be confirmed. Meanwhile, IOC President Thomas Bach emphasised that "the coming months will require flexibility and creativity from everyone involved as the Tokyo organisers deliver Games fit for a post-corona world."
He added, "I am sure we will make it, we will make these Olympic Games a success."
"The Olympic Games in 2021 should be simplified."
The 20 Events That Shaped Asia’s Travel Year: Part I
Today, subscribers can read the first instalment of an exclusive two-part preview (part II on Wednesday) of my new report, The 20 Events That Shaped Asia’s Travel Year, which will be officially launched (with extra features and formatting) on 4 October.
1. Chinese Outbound Shutdown
Over the past decade, China has established itself as the engine of global travel growth. Around 155 million outbound trips were made from China, the world’s largest outbound market, last year - up from 57.4 million in 2010. Although the rate of annual growth was slower than in previous years, Chinese tourists continued to boost previously low-volume tourism economies, ranging from Antarctica to Serbia to Sri Lanka, as well as much of South East Asia.
Chinese tourism has also played a frontline role in the liberalisation of short-term visa entry policies across Asia and worldwide. In addition, Chinese spending power supported hoteliers, retailers, F&B outlets and travel businesses on all continents.
So a year in which Chinese travellers would be shut out of the global travel ecosystem appeared unthinkable. And yet that is what has happened.
China bolted its own borders, and most Asia Pacific destinations did likewise. The supply line and demand generation for Chinese tourism have been suppressed.
The coronavirus outbreak from its source in Wuhan, coincided with the 40-day Chinese New Year Travel period, recognised as the world’s largest annual human migration. As viral concerns escalated, destinations worldwide were preparing to welcome around 7 million mainland travellers during the Chinese New Year public holiday. Waves of privately booked flights, hotel rooms and holidays were cancelled.
Then, on 24 January – just before Chinese New Year – the Chinese government prohibited travel agencies from operating domestic and outbound tours until further notice. Gradually, the nation’s international travel infrastructure shut down. It was not until 26 March, however, that China formally closed its borders to inbound visitors.
China remains closed except for essential business travel corridors with a few Asian countries, returnee citizens and foreign residents with work and student visas.
2. IATA Sounds a Clear Warning
As airlines in China and parts of Asia began slashing capacity, the International Air Transport Association (IATA) warned of a difficult year ahead. On 6 February, it noted that global air passenger demand rose 4.2% in 2019 – down from 7.3% in 2018. This "marked the first year since the global financial crisis in 2009 that passenger demand growth fell below the long-term trend of around 5.5%." The blame was placed on "a softer economic backdrop, weak global trade and geopolitical tensions."
Warning bells were ringing.
Asia Pacific passenger traffic had increased 4.5% in 2019, a large decline from 8.5% in 2018. As the coronavirus engendered a fear of flying, IATA noted that:
“There currently is no advice from the WHO to restrict travel or trade.”
By 20 February, the tone had changed. In an initial impact assessment, IATA forecast "a potential 13% full-year loss of passenger demand for carriers in the Asia-Pacific region… that would translate into a USD27.8 billion revenue loss in 2020 for carriers – the bulk of which would be borne by carriers registered in China."
These figures, however, assumed "that the centre of the public health emergency remains in China."
IATA’s most recent projection is for airlines worldwide to shoulder total revenue losses of USD419 billion. Ominously, on 25 September, it stated "10 days before the start of Q4 [global air ticket] bookings are on average 78% below their level a year ago."
3. “Go Hard, Go Early”
New Zealand’s Prime Minister Jacinda Ardern is currently campaigning for re-election. Her handling of COVID-19, predicated on scientific advice that "The best way to protect the economy is to fight this virus," has earned international approval.
Emboldened by a strong public health system, and a small, dispersed population, she reacted quickly. Deciding, in her words, to "Go hard and go early," she implemented a border closure plus strict movement and public gathering restrictions in mid-March aligned with a proactive test, track and trace system.
After 102 days without a domestic transmission, New Zealand successfully suppressed a second outbreak, believed to have been imported by returnee citizens arriving from the UK. It has survived the Antipodean winter without a serious spike in cases. New Zealand has recorded 1,477 cases during 2020, and 25 deaths.
As the Northern Hemisphere enters the Autumn and Winter season - with particularly dire COVID-19 forecasts in Europe and the US - countries like New Zealand provide pragmatic case studies. Alongside South Korea, Taiwan, Hong Kong and – although it struggled to contain the virus in its foreign worker dormitories - Singapore, it proved that proactive prevention reduces the reliance on a pharmaceutical solution – at least to control community transmission.
Opening borders is a different matter - as recent cases of returnee travellers testing positive on arrival to countries across Asia have shown.
International compliance standards for COVID-19 testing and vaccination protocols will be required to prevent green zone countries that have suppressed the coronavirus from being re-infected by visitors from orange or red zone nations.
”Was the then recent experience of a rapidly and widely spread outbreak on the Diamond Princess in Japan a reason that drove a decision to get passengers off the Ruby Princess as soon as possible?” Special Commission Inquiry into the Ruby Princess.
4. “The Plague Ships”
The cruise sector provided early case studies of transmissibility in confined spaces. So-called “Plague Ships” with recorded cases onboard were denied permission to dock at ports worldwide. Two particular ships remained in the spotlight for long periods.
Diamond Princess was quarantined in Yokohama Port, Japan, from 3 February to 26 March. It arrived in port carrying 3,711 passengers and crew, but the coronavirus had spread through the ship infecting 712 people. Some 13 people subsequently died. An ill patient had disembarked during the voyage in Hong Kong. At the time, it was widely reported as the largest COVID-19 cluster outside of China. A Japanese epidemiologist described conditions on board as "completely chaotic."
Several countries including the US, which counted 428 citizens on board, shuttled diplomatic efforts to evacuate passengers. In an article published on 27 April, the British Medical Journal described the Diamond Princess as "the ship that taught epidemiologists crucial lessons."
It was later revealed that mitigation measures undertaken onboard may actually have reduced the number of infections.
The second high-profile incident was aboard the Ruby Princess. The cruise ship departed Sydney on 8 March with 2,700 passengers and crew, and returned on 19 March. During that 11-day period, COVID-19 had been categorised as a pandemic.
Amid scenes of administrative confusion, hundreds of passengers were permitted to disembark on 19 March without being tested, despite COVID-19 being rife on board. Some 28 people died.
A four-month Special Commission Inquiry completed in August chastised the absence of secure public health protocols following the virus outbreak.
“The infectiousness of SARS-CoV-2 was understood to be such as to mandate taking all reasonable steps to prevent its spread from a cruise ship.”
5. WHO Calls a Pandemic
On 11 March 2020, the World Health Organisation confirmed the planet’s worst fears: a pandemic. The cross-border spread of COVID-19 infections was increasing at an alarming rate. In the previous two weeks, conformed global cases had increased 13-fold, and the number of countries involved had tripled.
Worldwide, 118,319 case cases had been recorded in 114 countries (80,955 of which were in China), and 4,291 deaths. Four new countries reported cases that day, Burkina Faso, Bolivia, DR Congo and Jamaica.
“Deeply concerned both by the alarming levels of spread and severity, and by the alarming levels of inaction, the WHO has made the assessment that COVID-19 can be characterised as a pandemic.”
A psychological shift occurred immediately. The mere word ‘pandemic’, which most people only recognised from Hollywood movies and rarely read risk assessment reports, hotwired a current of fear through governments worldwide.
Flight bans, border closures and national lockdowns ensued on all continents.
“Pandemic is not a word to use lightly or carelessly. It is a word that, if misused, can cause unreasonable fear, or unjustified acceptance that the fight is over, leading to unnecessary suffering and death,” Dr Tedros Adhanom Ghebreyesus, WHO Director General, 11 March
In effect, 2020, as the world’s 7.795 billion citizens would come to know it, began here.
6. Tokyo Olympics Postponed
On 24 March, Japan’s Olympic bubble evaporated. At least for 12 months. On that date, the 2020 Tokyo Olympics – due to take place from 24 July to 9 August – were postponed until 2021. The previous day, the WHO recorded a cumulative total of 372,755 COVID-19 cases worldwide, 1,128 of which were in Japan.
Tokyo was awarded the right to host the 2020 Games by the International Olympic Committee in 2013. Estimates vary, but it has been reported that it spent between USD10-15 billion to transform the capital Tokyo and its sporting, transport and travel infrastructure. The objective was to welcome 40 million visitors in Olympic year.
“Japan has recorded 11 successive monthly deceases in visitor arrivals, dating back to October 2019.”
Even before the pandemic struck, that figure was rolled down. Japan welcomed a record 31.9 million visitors in 2019, but this represented just 2.2% growth from 2018 – largely due to a simmering trade dispute with South Korea that spilled into tourism from August 2019 onwards.
The pandemic has amplified structural issues that existed in Japan’s tourism sector.
Stringent restrictions on entry in recent months resulted in the nation recording a 99.9% year-on-year decline in arrivals for 4 successive months, from April to July 2020. A marginal increase was registered of 99.7% in August. However, Japan has recorded 11 successive monthly deceases in visitor arrivals, dating back to October 2019.
The tone is now changing. Japan’s new Prime Minister has stated that the country needs to gradually reopen its travel sector, paving a pathway to hosting the delayed Olympics in July/August 2021.
7. Singapore Changi Shutters 2 Terminals
This year began positively for Singaport Changi Airport. Named Asia’s most connected hub airport by OAG in 2019 – when it handled 68.3 million passengers – it posted 5.2% year-on-year passenger growth in January 2020.
A dramatic slowdown began in February, and in April the airport announced that Terminal 2 operations would be suspended for 18 months from 1 May. By 12 May, a continued "sharp decline in flight movements" resulted in T4 also being shuttered. In mid-June, construction of a new T5 was postponed for "at least two years."
Singapore Changi Airport was opened in 1981, and corporatised, as Changi Airport Group, in 2009. Over the next decade, it experienced a passenger traffic increase of 84%. It has received the Skytrax World’s Best Airport award for 8 consecutive years.
Currently, transit passengers are permitted through special holding areas at T1 and T3. The region's busiest airport counts no domestic air traffic.
In the first 8 months of 2020, Singapore Changi handled 11.3 million passengers, with 11.05 million of those passing through its terminals between January and March 2020.
8. Trans-Tasman Travel Bubble
It is 5 long months since Australia and New Zealand jointly introduced "Travel Bubble" to the COVID-19 vernacular. In the final week of April, Australia’s Prime Minister Scott Morrison and New Zealand counterpart Jacinda Ardern publicly stated they were in discussions to establish "a Trans-Tasman travel bubble."
This would be a controlled testing of the waters between two geographically isolated island nations with a similar travel culture and strong bilateral flows for business and leisure. Neither country has land borders, which was a decisive factor.
At the time, Australia and New Zealand seemed en route to becoming ‘COVID safe,” and a high degree of complementarity existed for a safe, quarantine-free travel bubble between the two nations, even though it was not expected to begin for several months.
A resurgence of cases in Melbourne and the state of Victoria altered the travel bubble. Rather than a bilateral national agreement, it may instead commence on a trial state or regional basis between the two countries later in 2020.
Several countries in Asia have since sought to appropriate the "Travel Bubble" concept, which has moved away from its original notion. A major stumbling block has been reciprocation of terms and scale for such a bilateral agreement, as well as the precarious nature of managing virus transmission.
Porous land borders plus high degrees of economic migration also render bubble agreements difficult to negotiate in many parts of Asia.
9. Cambodia Introduces USD3,000 Deposit
First-mover advantage can backfire, especially if the cards are played with a heavy hand. In June, Cambodia held some impressive tourism cards. A beguilingly low COVID-19 case infection rate - even today it counts less that 300 cases and zero deaths - encouraged it to make a play for inbound tourists as a ‘COVID-safe’ destination.
The economy was hurting badly. Cambodia had welcomed 6.7 million visitors in 2019, and targeted 7 million in 2020. By now, that figure was clearly impossible, so the reopening strategy must have seemed a fair gambit.
Except Cambodia miscalculated on two fronts. Firstly, virtually all of its vital Asian source markets were preventing travellers from leaving the country. So there was no demand to tap. Secondly, it clumsily announced a USD3,000 deposit would be required by all inbound visitors upon arrival at the airport.
The Cambodian Ministry for Economy and Finance published a detailed list of potential expenses to justify the deposit, which included quarantine fees, COVID-19 tests, medical treatment, security services - and, ahem, funeral costs.
Furthermore, Cambodia’s travel sector had not been consulted before the announcement was made. Tour companies made clear their views about the scheme.
Subtly, the USD3,000 deposit figure has been reduced, but Cambodia’s inbound source markets have proved reluctant to show their hand.
10. AirAsia’s Future “In Doubt”
2020 has been an unforgiving year for airlines, especially those without a governmental credit hotline. AirAsia, South East Asia’s largest low-cost carrier, has experienced a tumultuous 9 months.
In July, an unqualified audit statement noted its debts exceeded assets by an eye-watering figure, and stated “material uncertainty related to going concern.” The company was “facing its biggest challenge in 19 years”. As Malaysia’s flight paths remained shut since 18 March, the LCC reported its largest net loss since listing on the Malaysian stock exchange in 2004.
At the height of the crisis, before domestic air travel was permitted to recommence, analysts claimed AirAsia was burning though RM120 million per month. Its stock price slumped.
Always the media bull, CEO Tony Fernandes responded to a CNBC interview question about how much capital was needed by saying, “It’s a moving target. I’d be comfortable with 1 billion Ringgit, I’d be super comfortable with 2 billion ringgit, and we are well on the way to achieving those targets.”
AirAsia has publicly acknowledged that its future capacity will be slimmed down, and that it is continuing to negotiate new sources of funding. Questions remain about its Indian and Japanese operations, which Fernandes has said may be casualties of a restructure.
Meanwhile, AirAsia has launched a new aircraft engineering services division, and plans to unveil a ‘SuperApp’ in early October.
Feedback
It’s always great to get feedback, whether good, less good or indifferent. Please feel free to drop me a note using the button below.
Responding to comments made in Issue 5 last Sunday, Mac Patel, Regional Sales Director of OAG in Singapore, writes:
"The recent comments from Cathay Pacific Group suggest that they will be restructuring the business, which is coming up in October, on its future shape and size. It has adequate capital, and is one of the strongest in the region along with Singapore Airlines, so I think the decisions that these two airlines will make will shape how other carriers will transform."
Look out for a fascinating Q&A with Mac Patel discussing all things aviation in Asia Pacific in Wednesday’s Asia Travel Re:Set
Meanwhile, Enzo Zangrilli, Owner & Senior Consultant of 1Aviation Consulting in Rome, says:
"This winter will be the worst we have ever seen in aviation. Homogenous and standard testing at airports are needed now. Governments must agree standard procedural platforms. With no common approach, we can say goodbye to hub-and-spoke models, and traffic at an intercontinental level. Domestic and short-haul bubbles will be what we are going to see for all of the next year as a minimum."
And Albert Sánchez Ramos, Founder & General Manager of WeTouring in Barcelona, comments:
“Fantastic news! After 6 months, the first international inbound flight arrived to Hanoi this Saturday. Even though this could seem a small step, we should take it in an optimistic way. The wait may be long but the travel industry will be back again sooner than later. Many EU governments can learn from Asian countries about how they are successfully controlling the situation. Safety protocols at the airports, test, tracking, quarantine zones ... sometimes even with less resources but better management.”
And, that’s a wrap for Issue 7.
Asia Travel Re:Set will return on Wednesday.
Until then, you can catch me on Twitter, LinkedIn and The South East Asia Travel Show. Please send ideas, thoughts and feedback to gary@check-in.asia.
Speak soon
Gary