TRAVELLERS in the Asia-Pacific region experience higher fares compared to other regions, with airfares in Singapore averaging 27 per cent above pre-pandemic levels.

The increased cost of travel is driven by higher operating costs and supply-side constraints such as air transportation employment, which remains below pre-pandemic levels across the region, according to a report by the Mastercard Economics Institute on Monday (May 23).

This comes as the easing of travel restrictions and pent-up demand have given rise to a strong rebound for travel in the Asia-Pacific region since the pandemic.

The report said leisure flight bookings have remained above 2019 levels since January through April 2022, while business flight bookings exceeded 2019 levels at the end of March 2022, for the first time since the pandemic started.

Mastercard said it has “more reasons to be optimistic than pessimistic”, even as markets across North Asia and mainland China have yet to relax border measures, as it expects 430 million more passengers will fly in the Asia-Pacific region compared to last year if flight booking trends continue at their current pace.

Strong recent hiring, pandemic-fuelled excess savings and lower commuting costs as people work from home may also free up some money for travel and other discretionary spending.

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Although high inflation will likely weigh on consumers’ purchasing power for the rest of 2022, especially for discretionary purchases like travel, the impact is likely more nuanced and uneven given massive levels of pent-up demand, Mastercard said.

The report also noted that international tourists were spending more on services than goods, with spending on restaurants and concerts roughly 34 per cent above 2019 levels, and outpacing spending on things since July 2021.

Singapore recorded one of the highest international tourist spending on experiences in a destination globally, with a 60 per cent increase in spending from pre-pandemic levels through March 2022.

Additionally, domestic spending has also picked up in transportation industries in many Asia-Pacific markets, especially where road trips have retained their appeal. The report noted that fuel spending has gone up in Singapore, Hong Kong, the Philippines, and Australia, while public transportation and cruise lines are also recovering.

Among Asia-Pacific travellers, the US is the most popular travel destination, followed by Australia and then Singapore, likely because people favour destinations that have fewer complex entry and quarantine requirements, travel restrictions, and testing procedures.

The report, however, expects the trend will shift towards intra-regional travel in the months to come as restrictions are relaxed, and domestic travel picks up once again.

David Mann, chief economist of Asia Pacific and Middle East Africa at the Mastercard Economics Institute, said: “2022 will prove to be a significant year for the travel industry in Asia Pacific. As border restrictions relax, we have witnessed an accelerated return to travel that indicates cause for optimism, with the region poised to swiftly catch up with the rest of the world.”