Regulatory requirements Even prior to the pandemic, there has been increasing pressure on airlines to transition to low-carbon operations as the world seeks to manage the issue of climate change. Within the industry itself, in 2016 ICAO set the target for airlines to be carbon neutral by 2021 compared to the baseline year of 2019, and to achieve net zero emissions by 2050. As at end 2021, its Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) had been voluntarily adopted by 104 countries including Malaysia, Thailand, Indonesia and the Philippines. Accordingly, all registered airlines in these nations are required to comply with CORSIA and its targets on CO2 emissions from international aviation. e-Economy The pandemic has accelerated e-economy growth throughout the world, including Asean. According to a 2021 Bain, Temasek and Google report, gross merchandise value (GMV) of the e-economy in Vietnam, Thailand, Malaysia, Singapore and Indonesia would record strong double-digit growth during the year, while that in the Philippines was expected to surge by 138%. Driven by pandemic-imposed movement restrictions, more consumers are going online. As many as 40 million people across the six countries surveyed came online for the first time in 2021, pushing the total number of internet users to 440 million. Of this number, 80% made at least one online purchase. According to the same report, at least 60 million people in the region used digital services for the first time post-Covid, 20 million in the first half of 2021.1 Among the fastest-growing e-economy sectors are: • Food delivery – 65% of e-commerce users reported an increased frequency in purchasing food online in 2021. Food also remains the most on-demand penetrated service, with 71% of internet users ordering food online. • Groceries – 62% of users reported increased frequency in purchasing groceries online. • Ride hailing – 55% of new users in 2021 hailed a ride weekly or more, compared to only 38% of existing users, indicating that ride-hailing is seen to offer unique pandemic advantages (eg better contact tracing than traditional taxis; and greater security than public transport) • Fintech – year on year there has been a 17% increase in digital remittance flow; 48% increase in lending loan books; 9% increase in digital payments; 40% increase in digital insurance premiums; and 35% increase in digital assets under management Overall, the internet economy in the six countries is predicted to cross USD360 billion by 2025, and to be between USD700 billion and USD1 trillion by 2030 as online shopping becomes the norm. Logistics As with most industries, logistics has been significantly impacted by the pandemic, with the grounding of aircraft severely depleting the belly space that operators have relied on. In the first couple of months after Covid-19 was declared a pandemic, the volume of air cargo ton kilometres (CTKs) dropped drastically. However, as passenger aircraft were converted into fully-cargo carrying flights (preighters), CTKs picked up and by early January 2022 was even 5% higher than pre-Covid volume in August 2018. 14 15 16 17 18 19 20 21 22 23 24 25 2016 2017 2018 2019 2020 2021 Actual Seasonally adjusted Industry CTKs (billion per month) Source: IATA Economics, IATA monthly statistics Our Operating Environment (cont’d.) 0 6 0 C A P I T A L A B E R H A D
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