EXPLAINER

Jump-starting Aviation and Tourism in Central Asia amid COVID-19

CAREC countries suffered an overall 68% decline in passenger traffic for 2020 or 40 million fewer passengers than 2019. Photo credit: ADB.
CAREC countries suffered an overall 68% decline in passenger traffic for 2020 or 40 million fewer passengers than 2019. Photo credit: ADB.

Published: 19 May 2021

The pandemic opens an opportunity to reset CAREC’s aviation industry through green lanes and domestic tourism, among others.  

Introduction

The coronavirus disease (COVID-19) pandemic has had a devastating impact on the aviation industry globally as nearly all air travel came to a halt in late March and April 2020. The Central Asia Regional Economic Cooperation (CAREC) countries were no exception as virtually all scheduled international flights were suspended, and several countries implemented bans on domestic air travel in an attempt to contain the spread of COVID-19.

CAREC groups together 11 countries: Afghanistan, Azerbaijan, the People's Republic of China, Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan.

Domestic markets in Central Asia started reopening in May 2020 and most domestic routes have now resumed. However, passenger traffic is still below precrisis levels in most CAREC countries and will likely not fully recover until after the pandemic.

Border restrictions remain in place throughout the region, impacting demand for international air travel and limiting tourism. International passenger traffic volumes now are a tiny fraction of what they were prior to the pandemic. More international services are expected to gradually resume over the next several months.

The recovery of international passenger traffic will be very slow. International traffic is expected to still be at a small fraction of pre-crisis levels in 2021 and not fully recover until at least 2023. The reduction in international passenger traffic for 2020 and associated reduction in tourism will have a huge economic impact. CAREC aviation and tourism must implement reforms, new strategies, and restructurings to mitigate and recover from the impacts of this pandemic.

This article is adapted from a study, Impact of COVID-19 on CAREC Aviation and Tourism, published by CAREC and the Asian Development Bank (ADB).

How has COVID-19 affected aviation and tourism?

CAREC’s aviation industry is proportionately more impacted by the pandemic than the global aviation industry due to heavy dependence on the international market. Prior to COVID-19, the domestic market accounted for only 27% of passenger traffic compared to 73% for international.

40 million fewer airline passengers in 2020

While the level of impact varies by country, CAREC countries suffered an overall 68% decline in passenger traffic for 2020 or 40 million fewer passengers than 2019. Before the pandemic, the aviation market—excluding the People’s Republic of China (PRC) — consisted of nearly 60 million passengers annually. Countries relying heavily on international traffic and international tourism (Georgia, Tajikistan, and Uzbekistan), have a bigger decline than countries with bigger domestic markets (Kazakhstan and Pakistan) and smaller tourism industries (Afghanistan and Turkmenistan).

$7 billion reduction in passenger revenues

Global passenger revenues for 2019 reached $612 billion, according to data from the International Air Transport Association (IATA). CAREC’s share was approximately $10 billion. This is based on its portion of total traffic and adjusted to reflect higher average fares for CAREC given the relatively small size of domestic market and low market share from low-cost airlines. The estimated airline revenues for CAREC in 2020 is expected to decline to just $3 billion.

$11 billion reduction in international visitor spending and $27 billion reduction in travel and tourism contribution to GDP

The international visitor spending in CAREC is estimated to decline by 85% in 2020 or around $11 billion less than in 2019. The total travel and tourism contribution to GDP in CAREC is projected to drop by 70% or around $27 billion in 2020. A higher proportional decline than the global average is projected due to CAREC’s higher average reliance on international tourism. The projected $27 billion reduction for 2020 is applied on a base of $38.5 billion in 2019—calculated using the World Travel and Tourism Council figures for eight CAREC countries plus an estimated $230 million for Afghanistan and Turkmenistan.

1 million jobs at risk

Around 1.5 million jobs of the 65.5 million global jobs are in CAREC countries and 1 million are at risk. Pakistan has the most jobs at risk (3,881,900 in 2018), followed by Georgia. Azerbaijan, Mongolia, Kazakhstan, and Uzbekistan, which have roughly similar number of jobs at risk. Afghanistan, the Kyrgyz Republic, and Turkmenistan have the least number of impacted jobs.

The number of jobs in travel (includes aviation) and tourism can vary significantly by country depending on popularity as a tourist destination and workforce efficiency.

 

Estimated COVID-19 Impact on CAREC in 2020

Airline traffic reduction

40 million passengers

Airport traffic reduction

6 million passengers

Passenger revenue impact

$7 billion

Travel and tourism jobs at risk (IATA methodology)

1 million

Reduction in travel and tourism GDP contribution 

$27 billion

Reduction in visitor numbers

33 million

Reduction in visitor arrivals by air

5.5 million

Required financial support for CAREC airlines

$2 billion

 

What are the mitigation and recovery strategies that CAREC can implement?

Domestic tourism will continue to play an important role in 2021 and until the end of the pandemic. Its revenues could reach record highs for several CAREC countries in 2021 as restrictions on overseas travel will likely remain and many residents may prefer to holiday closer to home even if border restrictions ease. However, to fully realize the potential of domestic tourism, countries will need to promote domestic holidays, and tourism companies will need to adapt to meet the needs of local travelers. A quick recovery in domestic tourism helps mitigate the impact to the overall tourism sector.

Most CAREC residents have never fully explored tourism destinations in neighboring CAREC countries. Travel to another CAREC country that does not share a border is even less common.

Countries in other regions have been establishing green lanes—also known as bubbles or air bridges—with select countries. There are no green lanes yet in CAREC.

While some CAREC countries have started lifting border restrictions, the approach has generally been piecemeal and unilateral. Bilateral green lanes between CAREC countries or a multilateral green lane involving several CAREC countries would help facilitate the resumption of travel.

The green lane concept provides an option for countries that have been relatively successful in containing the virus to reopen to each other with certain guidelines or requirements. The requirements for traveling in the green lane vary by country but can include testing negative for COVID-19 prior to travel. There can also be daily limits on the number of travelers.

Countries should also consider establishing visa-free policies. While visa-free options have increased in recent years, most CAREC countries still require visas from some other member countries.

A lack of connectivity has long been a major impediment to travel between CAREC countries. Prior to COVID-19, only 18 or 44% of all CAREC country pairs (excluding the PRC) were connected with nonstop flights.

The lack of nonstop frequencies makes it difficult to travel around the region for business or leisure. Weekend getaways or 1 day business trips, which are common in other regions such as Europe or Southeast Asia, have been impossible between most CAREC countries due to limited flight frequencies.

Under normal circumstances, it could take a few years to rebuild the limited connectivity between CAREC countries that existed pre-COVID-19, setting back by several years CAREC aspirations for improving connectivity. However, it could be feasible to reestablish in 2021 the air connections that existed before COVID-19 if green lanes between CAREC countries are implemented and if intra-CAREC tourism is promoted.

New route incentives are typical around the world but have not been used effectively to facilitate new air services within CAREC. Several new routes connecting major cities with tourist destinations in other CAREC countries could be stimulated with a combination of green lanes, the right policies, and promotions.

CAREC airports and governments should look at further investing in cargo facilities to help attract more transit cargo and support exports. Cargo is generating critical revenues for airports and airlines during this difficult time. With the right strategies, cargo could become an even bigger revenue generator for the aviation industry and help stimulate trade.

Governments should also pursue full liberalization of the air cargo market to facilitate growth during and after the pandemic. Air cargo services generally operate in a more liberal regulatory environment than passenger services—both in CAREC and globally. However, further liberalization would help CAREC countries recover economically and make the movement of goods, including perishable food, easier during this challenging period.

COVID-19 has led to major changes in the air travel experience to minimize risk of the virus spreading. Airlines and airports around the world are now accelerating the adoption of new technologies to support contactless travel.

Many airports in CAREC rely mainly on manual check-in and boarding processes. Significant investments will be required to support digital and contactless procedures. Capacity constraints also must be carefully managed to meet social distancing requirements, particularly in airport terminals that mainly cater to domestic travel as domestic traffic will recover much faster than international traffic. Investment by CAREC airlines will also be required to facilitate online or mobile check-in and document checks.

CAREC countries should consider adopting uniform regulations and standards for air travel during the pandemic. Globally there is a lack of harmonization, which the aviation industry is now trying to address with new guidelines and recommendations for mitigating the risk of virus transmission during the travel process.

CAREC countries should look at adopting the new guidelines and recommendations issued by the International Civil Aviation Organization. Conforming to new global standards will facilitate the resumption of international travel and eliminate differences in regulations from country to country, which are now creating challenges and confusion for airlines and passengers.

Other Recommendations

  • CAREC countries should consider providing support packages to help airlines, airports, and other aviation industry companies survive a period of significantly reduced revenues.
  • Provide general support packages to the aviation and tourism industries through benefits such as wage subsidies, tax reductions, and fee waivers.
  • Consider alternative funding options to offset the impact of reduced overflight revenues.

This study was published in November 2020. All the impact figures for 2020 are therefore estimates. The CAREC Webinar Series – Aviation and Tourism provides recent discussions regarding this topic.

Resource

Asian Development Bank. 2021. Impact of COVID-19 on CAREC Aviation and Tourism. Manila

Ask the Experts

  • Brendan Sobie
    Senior Aviation Specialist, CAREC

    Brendan Sobie has been covering aviation for over 20 years. He has been involved with the CAREC Aviation program since early 2017. As a thought leader on aviation issues in the Asia Pacific, he frequently writes commentaries and white papers and provides insights for news networks such as Bloomberg, CNBC, and Al Jazeera. He was previously chief analyst for CAPA - Centre for Aviation. 

  • Valerie Lisack
    Senior Advisor to the Vice President, Asian Development Bank

    Valerie joined ADB as a transport specialist in 2008 and has been involved in transport projects in 3 regional departments: South Asia, Southeast Asia, and Central West Asia. Prior to ADB, Valerie held positions in the French Railway Infrastructure Manager (railway line development) and Cofiroute (French motorway company). She has a master's degree in Civil Engineering as well as an MBA.

  • Central Asia Regional Economic Cooperation Institute (CAREC)

    The Central Asia Regional Economic Cooperation Institute (CAREC) is an intergovernmental organization promoting economic cooperation in Central Asia and along the ancient Silk Road through knowledge generation and sharing. CAREC is jointly shared, owned, and governed by 11 member countries: Afghanistan, Azerbaijan, People’s Republic of China, Georgia, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan.

  • Asian Development Bank (ADB)

    The Asian Development Bank is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.

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The views expressed on this website are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.




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