Airlines start to rationalise Australia-Southeast Asia market, but more enduring efforts needed

The over-capacity Australia-Southeast Asia market is showing signs of improvement with airlines beginning to reduce capacity. Qantas and Singapore Airlines have down-gauged services, Qantas from 747-400 to A330-300 while Singapore Airlines has replaced a daily A380 flight at each of Melbourne and Sydney with a smaller aircraft.

Qantas has exited the Perth-Singapore market while Scoot continues to offer reduced frequencies on its Australian services. Garuda has abandoned plans to deploy 777-300ERs to Australia.

But these initiatives so far are largely the low-hanging fruit of cutbacks. Qantas still faces a reckoning of a Singapore-Australia market only slightly larger than Emirates' Singapore/Malaysia-Australia market. Capacity has yet to come out of Malaysia, where AirAsia X has aggressively built a presence, while Malaysia Airlines tenuously holds its ground in its largest international market, despite a higher cost base and mounting losses.