Asia-Pacific airlines are operating with minimal financial headroom as high jet fuel prices, multi-year aircraft delivery delays and softening passenger yields squeeze margins, Association of Asia Pacific Airlines (AAPA) director general Wong Hong said at the association’s 70th Assembly of Presidents in Kuala Lumpur this week.
Speaking at a media roundtable during his first Assembly since he succeeded Subhas Menon in April, Wong said fuel now accounts for roughly 33% of airline operating costs, with jet fuel crack spreads at multi-year highs.
“When jet fuel is trading at $185 to $186 per barrel, that is not normal and not sustainable,” Wong said.
Revenue is weakening as costs climb. Wong said passenger yields across the region turned negative year-on-year between April and August, then stabilised slightly in September, even though demand held up over the northern summer.
He warned that raising fares further to recover fuel costs risks demand destruction, and said airlines are now weighing capacity adjustments and pricing strategies.
According to Wong, Asia-Pacific airlines typically achieve net margins in the high single digits or low double digits even in favourable conditions.
On fleet renewal, Wong cited a global commercial aircraft backlog of approximately 16,000 aircraft and persistent aerospace supply chain disruption. He said discussions with member airline chief executives ahead of the Assembly showed that some carriers face delivery delays of up to six years on scheduled fleet additions. He did not name the airlines affected.
“You can imagine the frustration airlines face when they don’t get aircraft on their calendar schedule,” Wong said. “That delays the introduction of more efficient aircraft, and you end up paying for extra years of maintenance on older jets just to maintain capacity.”
The alternative, he said, is to give up growth altogether.
Wong said MRO shop-visit slot availability has improved modestly across the region and manufacturers have pledged higher production rates. However, he said the sector is “not out of the woods yet”.
On US import tariffs, Wong said supply chains have adapted by moving value-added manufacturing to third countries within legal trade frameworks. As a result, freight volumes remain strong heading into the fourth-quarter peak season.
Wong urged regional governments to benchmark airport charges, landing fees and aviation taxes against neighbouring jurisdictions, rather than treating air transport mainly as a source of fiscal revenue.
On sustainable aviation fuel (SAF), Wong said it would remain substantially more expensive than conventional jet fuel even if jet fuel reached $180 to $200 per barrel. He warned that rigid blending mandates without production incentives would price ordinary travellers out of the market. He also said Asia-Pacific airlines risk missing climate targets unless governments and energy producers tackle SAF supply bottlenecks and pricing. AAPA did not give a current SAF price premium.
Wong concluded by saying that the AAPA is talking to prospective full-service, low-cost and all-cargo carriers about joining, with the aim of expanding its 18-airline membership and strengthening regional regulatory advocacy.
