By Lisa Barrington

BANDAR SERI BEGAWAN, Brunei (Reuters)

Asia-Pacific travel demand has recovered from the pandemic, but earnings at the region's airlines are under pressure due to supply chain problems. Industry executives report that these issues are disrupting operations and exposing airlines to stricter consumer protection rules.

A shortage of parts, labor, and new planes has coincided with higher-than-expected repairs needed on the latest-generation engines as the aviation industry emerges from the pandemic. Subhas Menon, the director general of the Association of Asia Pacific Airlines (AAPA), noted, "The supply chain issue is the biggest challenge the industry is facing," during the trade body's annual meeting in Brunei this week.

Turnaround times for engine maintenance have reached record lengths, leading airlines to cut flights, relocate parts, and lease temporary engines or planes to maintain operations. Thai Airways CEO Chai Eamsiri mentioned that maintenance for Rolls-Royce engines on Boeing 787 jets has increased from three months to approximately six months, forcing them to stretch aircraft usage.

SUPPLY CHAIN FRUSTRATION

Executives from major carriers including Thai Airways, Singapore Airlines, Malaysia Airlines, and Kazakhstan's Air Astana expressed frustration regarding extended maintenance times. They argue that rather than blaming airlines for delays, governments should recognize that the root cause is the supply chain. Eamsiri pointed out, "But we are the one facing the customer."

Countries like Malaysia, Australia, Thailand, and the Philippines are enhancing airline consumer protections, requiring refunds for delays and cancellations. Malaysia Airlines has experienced service disruptions and reduced its network capacity by 20% as a response to the ongoing challenges. The civil aviation regulator in Malaysia has even shortened the duration of the carrier's air operator certificate from three years to one.

Airbus and Rolls-Royce representatives have indicated they are working to address these supply chain snags, including improving access to financing for suppliers.

AIRFARES FALLING

Travel in the Asia-Pacific region recovered later than other areas due to delayed lifting of pandemic travel restrictions, particularly in China. According to AAPA data, passenger volumes for 40 Asia-Pacific-based carriers in September averaged 97.5% of the corresponding month in 2019.

Global airlines are experiencing stable demand, but airfares are declining as the post-pandemic travel boom lessens. Singapore Airlines recently reported a 48.5% decrease in interim net profit, indicating stiff competition and signaling earnings will remain under pressure despite strong travel demand.