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Thursday, April 18, 2024

Asia-Pacific and Middle East to Spearhead Global Economic Revival in 2024

Asia-Pacific and the Middle East region is expected to return as engine of global economic growth in 2024.In a significant revelation by the Airports Council International Asia-Pacific & Middle East (ACI APAC & MID), the latest Airport Industry Outlook co-developed with Mott MacDonald heralds a robust return to form for the Asia-Pacific and Middle East regions. These areas are poised to reclaim their status as the powerhouse of global economic growth by 2024 despite the lurking shadow of macroeconomic uncertainties that have previously dampened the sector’s recovery prospects.

This comprehensive report unveils that the second half of 2023 witnessed a mere 3% dip in overall seat capacity compared to the latter half of 2019, with domestic capacity experiencing a 3% uplift. However, international capacity is still trailing by 14%, underscoring the uneven pace of recovery across the sector.

China’s border reopening at the outset of 2023 marked a turning point, propelling Asia-Pacific’s overall traffic to an impressive 90% of its pre-pandemic levels. The Middle East, not to be outdone, showcased a commendable near-4% increment over its 2019 performance, indicating a resilient and progressive path towards normalization.

Looking ahead to 2024, the forecast is filled with optimistic hues. The Asia-Pacific region is on the brink of a full-scale recovery, with the Middle East anticipated to not only follow suit but also set a new benchmark by hosting over 450 million passengers. This optimistic outlook, however, is tempered by the looming geopolitical tensions across Eastern Europe and the Middle East, notably the Red Sea crisis, which has upended international shipping routes and costs. Yet, this disruption holds a silver lining for the aviation sector, potentially boosting air cargo demand and rates, a testament to the industry’s adaptability and resilience.

Asia-Pacific and the Middle East region is expected to return as engine of global economic growth in 2024.
Asia-Pacific and the Middle East region are expected to return as engines of global economic growth in 2024.

Regarding cargo, the third quarter of 2023 saw steady cargo load factors (CLFs), mirroring pre-pandemic figures, with Asia-Pacific outperforming global averages. Despite prevailing challenges, this resilience in cargo operations underscores the region’s pivotal role in sustaining global trade dynamics.

Stefano Baronci, Director General of ACI Asia-Pacific & Middle East, accentuated the region’s critical economic position, stating, “Asia is poised to contribute two-thirds of global growth in 2024, embodying the world’s economic dynamo. The anticipated market share of nearly 40% in passenger and cargo traffic underscores our region’s monumental contribution to the global stage.” Baronci’s reflection on abandoning the term “pre-COVID recovery” in favour of a more forward-looking discourse encapsulates the region’s ambition and optimism for the future.

Financially, the airport sector within these regions has shown remarkable resilience. The third quarter of 2023 marked a continuation of profitable operations, with EBITDA margins climbing to 30%, albeit against a backdrop of slightly contracting net profit margins. This financial vitality is further evidenced by a 42% year-on-year surge in airport revenues despite remaining marginally below the 2019 benchmark.

This resurgence, however, comes at a cost. The report highlights a notable increase in operating expenses for the first time since the pandemic’s onset, attributed mainly to the uptick in labour and energy costs. This development reflects the industry’s broader economic pressures as it navigates the path to recovery.

In conclusion, the Airport Industry Outlook for the Asia-Pacific and Middle East regions paints a picture of cautious optimism. As these regions gear up to lead the global economic revival in 2024, their airport sectors’ resilience, adaptability, and strategic foresight stand as a testament to their readiness to embrace the challenges and opportunities. Amidst the complexities of macroeconomic and geopolitical landscapes, the Asia-Pacific and Middle East are not just navigating the storm but setting the course for the world’s economic recovery.




Written by: Supaporn Pholrach







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