Despite widespread political instability and mixed economic indicators, the outlook for Asia’s air transport sector in early 2017 remains broadly positive, according to Andrew Herdman, director general of the Association of Asia Pacific Airlines (AAPA). In an interview with AIN, Herdman reported that the recent Lunar New Year season had given 2017 traffic an early boost, with a 7.7 percent growth in international passengers carried during the festive period (compared with the same period in 2016) to a total of 26.8 million. The figure also compares favorably with the 6 percent growth rate for international passengers for the whole of 2016 (rising to 293 million).

Clearly referencing the controversial attempts at new immigration controls introduced in the U.S. by the new administration of President Donald Trump, Herdman told AIN that border control and security stands as a concern for Asia Pacific airlines. In his view, such policies could result in weakening demand for international travel, even on routes not directly affected by the new restrictions.

“We are always in favor of open borders and freedom of movement, and we are concerned about the barriers that have been put up and arbitratry restrictions based on nationality,” said Herdman. “It’s not just America but many are using travel restrictions as a political weapon.”

In Herdman’s estimation, security concerns do not justify the new restrictions. “We recognize that security is a concern for governments, but aviation is already highly secure. Intelligence and information is a way of further strengthening that. We are not enthusiastic about more screening and paperwork,” he argued.

The AAPA also remains mindful of possible restrictions on existing open skies policies due to actions of the U.S. administration. “The open skies was a U.S. policy and going back on that will have serious consequences not just in America but elsewhere too,” said Herdman. “I will be surprised if they reverse course on that, but it is a political process. We will see.”

Geopolitics has started to affect the air transport market in other ways. For instance, the recent deployment of the U.S. Terminal High Altitude Area Defense (THAAD) missile system to South Korea resulted in retaliation by the Chinese government to ban Chinese tourists from visiting South Korea. The China National Tourism Administration (CNTA) gave travel agencies in Beijing verbal instructions on March 2 to suspend sales of all travel packages, both online and offline, to South Korea from March 15. The agency threatened agents with the revocation of their licenses for non-compliance. Last year about 8 million Chinese arrivals into Korea accounted for about $2,300 per person in spending, and any ban will hurt the Korean tourism industry.

Meanwhile, new business models changing the Asia Pacific region’s air transport sector include that of China’s first budget carrier, Spring Airlines. There, a travel agent has become directly involved in operating flights. However, according to Herdman, the low-cost carrier model doesn’t seem to be developing quite as smoothly as it has in Europe, encountering difficulties in growing market share while achieving sustainable profit margins.

“In Asia a couple of low-cost carriers have expanded too quickly and the profitability has evaporated,” he claimed, adding that space to expand has become constrained within the region, prompting some carriers to pursue the challenging long-haul market. He argued that Asian start-ups will not necessarily find success by following the West’s established business model for low-cost operations.