Wong Hong, who heads up the Association of Asia Pacific Airlines, talks about industry optimism despite challenges.
Subscribe Now
Don't miss a single episode. Subscribe to Aviation Week's Window Seat Podcast in Apple Podcasts, Spotify or wherever you get podcasts.
Discover all of our podcasts on our at aviationweek.com/podcasts.
AI-Generated Transcript
Karen Walker (00:10): Hello everyone, and thank you for joining us for Window Seat, Aviation Week Air Transport podcast. I'm ATW and Aviation Week Air Transport Editor-in-Chief Karen Walker. Welcome on board. Now this week I am absolutely delighted to be joined by a very special guest who is joining me from Asia. He is Wong Hong, the new director general at the Association of Asia Pacific Airlines or AAPA. Wong Hong, welcome. Thank you for joining us. Wong Hong joined AAPA in April, bringing a wealth of international aviation experience that includes executive and management roles at Delta Airlines where he was the airline's president for China, at Singapore Airlines, and at the International Air Transport Association, or IATA. AAPA is a Kuala Lumpur-based organization that represents some of the largest and most prominent airlines across Asia and Australasia. It provides a common voice on issues like safety and regulation when communicating with governments, manufacturers, airport authorities, and regulators and others.
(01:15): And it keeps its member airlines informed on all important industry developments, and there are certainly plenty of those, Wong Hong, yes. So given your extensive career across the air transport industry, what are your initial thoughts having taken the helm at AAPA? You came on board in April, as I said.
Wong Hong (01:36): Thank you. Thank you very much, Karen, and thank you for having me at this podcast. I've taken up this role since April this year, and it's been about a few months into this job, and I'm really excited. As you know, and you mentioned earlier on, I spent a considerable amount of time in my previous job based in Shanghai. And in those last 10 years, I was focusing a lot more on the business, the airline business between China and US. So having been away from the Southeast Asia region and I'm being Singaporean, I'm very excited to be back in this region. And of course, witnessing here in this region as a remarkable trend of growth momentum right after COVID, since 2023, it has been a very smooth ride, except until, of course, earlier this year, and we can talk a lot more about that. But certainly in this role, it gives me an opportunity to really witness the growth in this region and support our member airlines in Asia Pacific who are actively trying to cater and serve to all the customers in Asia and then to connect them all around the world.
(02:55): So I'm really happy to take on this role and to help support the airlines in that direction.
Karen Walker (03:02): Excellent. Now we're going to drill down on a few of those things in a moment, but first of all, can I just ask you, because you have so much experience in that part of the world with the industry, how, in your opinion, does the Asia-Pacific air transport market differ from other regions?
Wong Hong (03:20): Well, I would look at the demographics per se, and the Asia Pacific is a very large geography, and it's not one contiguous block, if you like. So geographically speaking, it lends itself to a lot more opportunities that requires people to travel by air. And the other uniqueness in Asia-Pacific is that it's made up of a whole range of countries spanning from the Southwest Pacific and into Southeast Asia, up north into North Asia, and then moving westwards into the Indian subcontinent. So it's a very diverse geography to begin with, and diverse cultures as well, and that's what makes it really unique at the onset. The other thing I would say that really differs is if you have been looking at the trends for travel over the last 10, 15 years, you can see a very nice momentum being built in the Asia-Pacific travel, and the demand for travel will just continue.
(04:24): And simply because the demographics point to that scale of potential, meaning to say the middle-class population in Asia-Pacific is the biggest potential market potential that lots of companies, not just the airlines, keenly interested to try and tap. We're talking about nearly 50% of the world's middle-class actually resides in Asia-Pacific. And with that kind of potential, that brings about a lot of opportunities for my member airlines to try and serve them.
Karen Walker (05:02): Yes, as you say, it's an absolutely fascinating region, huge opportunities, huge growth, but also a very complicated region. Lots of different countries means lots of different governments, they change as well, and lots of different things always going on. And also the things that are happening outside of that region still affect this region. So can I just ask your thoughts and what you're hearing from your member airlines about the Asia-Pacific market, particularly on the financials and the operations side?
Wong Hong (05:37): Yes. Well, certainly coming off from a solid year of growth in 2025, Asia-Pacific, our numbers have been showing something like a 9% growth in traffic against 2024, and everyone was forecasting and really expecting a good 2026 momentum carrying through. And of course, we have three years of post-COVID recovery, which then of course lends itself to a good set of financials with profitable results for many of my member carriers. But having said that, as we now transition into 2026 and the Middle East conflict that arose, suddenly spun things in a complete 180-degree turn simply because the fuel prices have really shot up and took everyone by surprise. And jet fuel prices with the crack spread increasing, ever-increasing since March. Many airlines were actually really just refocusing their business on just trying to keep things going. First of all, they've got booking commitments from customers who already committed to travel, that were paid a few months back, and that has been already locked in.
(07:06): So as far as revenues were concerned, that couldn't change very much, but the costs were spiraling out of control. And that translates to a lot of anxiety and concern. Even at one point, there was a concern for fuel availability in the region in certain markets. I wouldn't say a lot, but certain markets even in Asia. So many airlines had to scramble and understandably focusing on network operations, having to decide how would they rationalize capacity in light of the surging fuel costs that actually would translate into operating losses for many of the routes. So for routes that were making good money, that's okay. But then there are many other routes that perhaps were thinner in terms of margin, then straight away it turns into a loss-making set of operations. So clearly that sounded a lot of alarm bells across the board, and many airlines obviously had to rationalize capacity to be able to try and sustain their business for however long the crisis was meant to continue.
(08:19): But of course, today here we are now in a few months down the road, it appears that at least there's some sort of stability, but yet we are still facing a whole set of volatility going on. It's not something that airlines can be very certain about in terms of the fuel prices. The jet fuel costs are today, something like about 120, 130, much lower than of course the heights of 200 US dollars a barrel, but certainly still far, far higher than what it was at the beginning of the year. So I would say it's been a challenging turn of events into 2026, and obviously it has impacted the operations and the financials as we now are starting to see many of our airline members' financial results for the April to June quarter. They're starting to come out. In the next two, three weeks, you would see more and more of the results that will be reported.
Karen Walker (09:23): Yeah. So a keyword there is uncertainty. That's such an enemy of the airlines. They're so used to it, unfortunately, but there's still a lot of uncertainty. But as you say, given all the situation that's been going on and given how important it is to really watch costs when some of those costs are out of their control, particularly oil, what about demand? Are people in the across Asia region still wanting to travel, still wanting to do those long flights?
Wong Hong (09:58): Indeed. In fact, that has been the saving grace, I would say. Many of my airlines have been telling me that despite some price increases because of either fuel surcharges or airfares having to be adjusted upwards, the drop-off in demand hasn't been as bad, which means to say there's still some desire for travel by a whole range of customers and willingness to pay. I guess maybe that's also everyone understanding the geopolitical situation. Everybody understands the fuel crisis, the Strait of Hormuz being in the news and all across the world. So people kind of understand it. But I think the main question will come because in the coming months, again, when people stabilize and get to a sense of normalcy or a new norm, would that be something that people will still be comfortable paying in terms of heightened airfares and increased prices? And of course the other potential headwind that many of the airlines are looking out for is whether or not the inflation will start to kick in.
(11:17): And if that starts to play out in the coming months, then you've got another headwind to take care of because then that would certainly dampen demand and we will really need to watch. I mean, so far, based on the latest information that I'm hearing from my member carriers, the summer season has been pretty good. Pretty good in the sense that the bookings haven't really dropped off that much. They're still holding out pretty well with the capacity that each airline decides on its own. And so far I think we're holding great. But of course we were coming off the summer. Then we'll need to see whether the demand will sustain or not.
Karen Walker (11:59): It's a lot of good news there. People still want to fly, but of course it makes it even more complicated for an airline to know where to reduce capacity and where to make sure that you can still deliver. It's very complicated. What about the cargo side? That's a very important part of the Asia Pacific. Well, across all of the Asia Pacific airlines, it's a very, very key part. A lot of the airlines there started with cargo and have a long history there. What's going on in the cargo side?
Wong Hong (12:33): Actually, cargo's results have been actually more impressive, I would say, and they're actually holding out really well. Some of the figures that we're seeing that are coming in are still showing good growth momentum. And I think a lot of that has to do with the fact that I think the manufacturing industries and the semiconductor has led the way despite tariffs that are still ongoing imposed from the U.S., mostly from the U.S. And I think the supply chain for production and manufacturing for factories, they've found a solution, I would like to say. I think this year you start to see that there are different patterns, different routes that are being established by and large, but still you would say Asia is still the manufacturing center of the world. And China, of course, plays a big, big part of that. And despite some of this heightened tariffs, they've found solutions and ways to overcome.
(13:35): And today I think we are in a fairly decent position with solid single-digit growth figures over last year. So I think we are looking at latest numbers for the first half about 7%. So that's pretty healthy, I would say, and we hope that will continue in the second half of the year.
Karen Walker (13:56): Yeah, that's interesting because it's rather like COVID. It's sort of what's helped the airlines to have some resilience, isn't it? Exactly. So again -
Wong Hong (14:06): Saving grace.
Karen Walker (14:07): Saving grace. Yes, that's right. One other thing I'd just like to ask you as to, again, what feedback you're getting is on the supply chain, the provision and quality of new aircraft and engines and a lot more cabins and everything. Been an issue, of course, worldwide, certainly an issue for a lot of the Asia-Pacific carriers. Do you get any sense that that's getting better?
Wong Hong (14:32): Based on the feedback that we are receiving, I would say broadly speaking, the airlines have come to a certain level of expectation and they're trying to manage as best as can be. The underlying delays hasn't really changed, I would say. I mean, it maybe has improved, but it's still a delay. And a delay is a delay and the delays can be still fairly significant. Aircraft that are meant to be delivered are coming two years further down the road. We've got engines also, but again, it's a spread. Certain airlines are having more waiting for the specific aircraft deliveries, but some of them are not able to receive more because of the engines. And it's a whole range of different types of issues. Some are also down to component level of shortage and all that. I mean, I won't go into all the details behind it, but we all understand it because this is not a new topic.
(15:32): This has been around for three, four years post-COVID, and we understand the reasons, but I suppose now airlines are trying to say, okay, whilst we understand all the constraints and the reasons, and it's like a perfect storm happening for airlines right after COVID, it's more the solutions that I think the airlines are asking about. How best can we work together in this entire chain to be able to cope? Of course, we will do our best as far as airlines are concerned too. We keep some of the old aircraft, you have no other choice, but to keep them running and keep them operating. Obviously it's suboptimal, but that's the best that we can do if there was demand. And maybe some relief, I would say, in the last three, four months because of the fuel crisis and some carriers have to cut back some capacity.
(16:22): So maybe there's a little bit of a breather, if you like. But by and large, I would say the underlying shortage, it's still there. It's still prevailing. And it doesn't help, of course, when you still see aircraft orders being placed. And that's also a signal of the optimism that carriers have for demand going forward in the next five, 10 years. So the orders will come in, but the orders will just add up to the backlog that we are already seeing today.
Karen Walker (16:52): Yeah. So a mixed bag, long going situation still, yet something else that the airlines are having to deal with. As you say, it's not really an ideal solution that, okay, well, because of the high fuel costs, it's not so important if the engines aren't there, but at some point that's got to be fully resolved. Yes. That sounds like some progress going to be made. Another thing I'd like to just ask you about is particularly on sustainability. We know how important that is to this industry, but it does seem to me that the whole sustainability side has really taken on new meaning across Asia-Pacific airlines. They really put it forward. And it's difficult, as you know, because there just isn't enough sustainable aviation fuel. Again, what's the feedback that you're getting? It's hard enough, just all the things we've talked about. It's hard enough to make money as an airline right now.
(17:52): And then you've got additional costs of sustainability. Is it still a priority for the airlines?
Wong Hong (18:00): Certainly, certainly. Well, this is what I would call this. Sustainability is a topic that it's not urgent, but it's very important. Not something that we have to solve today, but something we really have to solve it eventually. So it is a very challenging topic because it requires so many stakeholders from the government right down to obviously the fuel suppliers, the feedstock producers, and then down to the airports to deliver the fuel to the aircraft and so on. So it is a very complex set of challenges that airlines are facing. And if you heard what Willie Walsh said in the IATA, AGM in Rio, even 2050, net zero is actually a risk. Talking about just right now in 2026, projections are that SAF is just nowhere near, I mean, getting close to 1%. It can't even get to 1%. So when we are staring at these sets of numbers, it is very, very challenging.
(19:12): And Asia Pacific is no different. There's a lot of comments I'm happy to share. And some of the pointers, I mean, first of all, we in Asia Pacific AAPA has set a goal for a 5% SAF. And that's an aspirational goal that we want to be able to send the right messaging to all players to say that, "Hey, we are committed because we want to do the right thing as an industry in Asia Pacific." But it's difficult to achieve a goal if today the supply is so scarce and there's just not enough, or there's not enough at the right price. I mean, when we ask the same question, few suppliers are telling us, "Oh, we certainly have sufficient. We can deliver the fuel or the percentages of SAF if you want to the quantums that you want, but at a high price." And those prices are completely, I mean, I think they're not realistic.
(20:15): Because if you look at those prices as compared to what airlines are having to pay for fossil fuel prices, again, notwithstanding the current fuel crisis again, there has surged. But if you go and you compare, it is still two to four times more expensive. So how can you expect the airline as one player absorbing all of that? I mean, I make this at some of the forums, at the SAF forums and climate change conferences, making it very clear it is a collective responsibility. And that means all players will have to find some ways to get to the solution. And the solution cannot be that the airline is the only player that has to absorb all that cost. Even the traveler, the customer of course also will have to play some roles. And I think it's a long educational process, but everybody has to chip in if you like and play some part so that this can become more feasible, financially feasible and operationally feasible so that this can still continue.
(21:24): Because the airline industry ultimately serves a common good for everybody, for humanity and to connect people around the world. And people still want that, right? I mean, it's not something that people are saying, "Oh, if it's not doing the right, I don't want to fly." It's not right. So I think we need to try and help this process along the way, but with better education. And governments, governments can spearhead and take a much more active role. And this is what we're pushing also in Asia Pacific. And I'm glad to say there has been some momentum because we are looking across the regions and we are looking at some of the countries. We've got good examples from Thailand. We've got good examples from Japan whose governments are taking a leadership role and trying to bring all the players together and then work towards some solution. Mandate is a good thing, but it cuts both ways.
(22:27): It can be a bit tricky, but mandate must also translate to commitments by all players to be able to give enough supply or produce enough SAF so that this can be consumed and also hopefully at more reasonable prices. So there's a lot more work that needs to be done. And this is a huge, huge topic. Sorry to belabor this point, but it's a very complex topic as well. And just to add one more point, I think if you look at the recent developments in Europe, the European Commission has just come up with a new set of recommendations. They're pushing this, of course, through the process through parliament and the states in Europe. But this solution coming out or this proposal coming out is not going to work. I mean, it's another action that will end up fragmenting the process because ICAO has already obtained pretty much global support on CORSIA, which should be the only mechanism, a market-based measure mechanism to help support this process.
(23:40): So again, that's another whole train of subject where we can dive into. But of course, in the interest of time, I shall stop here. But I think that suffice to say that our airlines are very keen to support the process in Asia-Pacific, and we want to do the right thing. But we've got to work on this together with all the other stakeholders.
Karen Walker (24:09): You made some excellent points there. It is such a complicated but very important subject and just getting more and more challenging by the day, it seems. But I love the fact that obviously it's everybody. Airlines can't just turn around and make a SAF, number one. Yes. So governments of course are important. The oil industry is important, and they've been largely backing away in many places from the SAF side. And I love the fact that you made the point about the passengers as well. Well, if you ask people who are flying, they of course say, yes, we want our airline to be more sustainable. But they've got to also be part of what makes that possible. What you said, I mean, it's fascinating and very good that your member airlines have committed to a 5% SAF, but it's also sad in a way, isn't it? I mean 5% is still going to be a terribly hard goal to achieve, but everybody's realistic that it can't be higher than that at this stage.
(25:19): It's a very complicated program.
Wong Hong (25:21): You're right, you're right. I mean, even 5%, as you say, if you look at it at face value, it seems like, oh, we're so far away from where we need to be. But even at 5%, we're going to have challenges already now. And that's actually the alarm bell that's being rung. So we are asking questions and saying, how can we really get going? And we need to build some momentum. It's not something that even if every party says yes, it's not going to happen tomorrow. But things got to start moving before you can get to even the 2030 ambition and you get anywhere close to the 5% goal that we're talking about. And I think, again, this is a very complicated subject matter, and I certainly hope many governments would take the lead and try. Again, I can completely empathize. It's not an easy process to find a solution.
(26:20): And governments also may need to step in and offer some incentives and so on to be able to get things going. But it's again, not very different from when we talk about renewable energies. If it's wind, if it's solar power, these are also many new industries that have emerged in the last 10, 15 years, also because government has stepped in to support. So likewise, I think SAF is not very different. And we certainly hope, and there's going to be more collective ambition and effort and execution towards these goals.
Karen Walker (26:54): Sure. And then although it's a little ways off and so much can happen in a short time in this industry, in November there'll be the AAPA annual assembly, of course, and that's a fantastic event. All the CEOs of your member airlines are there and lots of their executives, a very important forum. Can you just sum up for me, like I say, it's a little ways off, but what do you think are the sorts of themes or topics that you will want to address there?
Wong Hong (27:25): Yeah, that's a very good question, Karen. It's actually not that far off. We're actually starting to make active plans to sort out the program and looking at what would be the most interesting topics that the airlines will be particularly concerned. And they don't move away very much from what we have just covered in our conversation. Sustainability, again, will continue to remain very important. It's a long-term goal, but there's now greater urgency to try and address and find good solutions. As I say, problems are plenty, but then where are the solutions? I think that's where we need to continue and be active dialogue and engagement with stakeholders. The other subject is safety, and that's always, always very important for our airlines. And I think just a small example, and it's an important example because it's a growing concern where we get power banks onboard flights that are actually turning into a high safety risk if they actually catch fire.
(28:36): And also because of these are all regulations that can certainly help. And this is where IATA as well as ourselves. AAPA has really pushed really hard and we're trying to put more clearer guidelines and hopefully ICAO will step in to support even further to be more clear. And many of our airlines already have taken their own initiative to try and work on this, to try and make sure that it is still very safe to fly despite the prevalence of a lot of these power banks have been carried by passengers on board. Then of course the supply chain, that's the other subject matter, which like I said, hasn't gone away. And of course, I think broadly speaking, that will be what you see with the assembly of presidents coming up in the middle of November.
Karen Walker (29:29): So yes, there's going to be a very special assembly this year. Tell us a little bit about that.
Wong Hong (29:36): Yes, Karen. In fact, AAPA has come a long way. And in fact, this year we will be celebrating our 60th year as an association for the region. So we're really excited to have everybody come together to reflect, of course, the past of how much, how long we have come, how much we have done, and to have spent some time to celebrate amongst ourselves as to how much was achieved, has already been achieved already over the last 60 years. And we're also looking forward because I'm also excited as the airlines gather to try and see how the Asia-Pacific region gets redefined simply because as I mentioned earlier, there's tremendous growth potential in the middle to long term. There's also a lot of resilience that you see as a result of overcoming crisis after crisis, and we certainly hope there will be less of it, but we can be quite sure there will be still some more obstacles along the way.
(30:42): And then of course with innovation also a tremendous opportunity leveraging artificial intelligence. So I think all members are very excited to look ahead and as we gather in November for this particular event.
Karen Walker (31:03): Yeah, there'll be a lot of serious talk, but certainly some celebration, well-deserved celebration. So it's going to be a great event. I'm looking forward personally to being there. So Wong Hong, thank you so much for all your insights for your time today. I know you have a very crazy schedule, so we really appreciate you giving us your time today. And like I say, sharing some insights in that particular region of the airline world. Thank you also to our producers, Cory Hitt and Natalia Pelayo. And of course a huge thank you to our listeners. Subscribe to Window Seat on Apple Podcasts or wherever you like to listen. And then till next time, this is Karen Walker disembarking from Window Seat.
Related Content
