Tigerair and AirAsia lead adjustments to overcapacity in the Jakarta-Singapore market

Jakarta-Singapore capacity has quickly dropped by over 20%, led by adjustments at LCC groups Tigerair and AirAsia. The declines reverse capacity increases from 2013, when a breakthrough in the Indonesia-Singapore bilateral led to a surge in capacity.

Jakarta-Singapore is the second largest international city pair route in the world but supply in late 2013 and 1H2014 far exceeded demand. As a result it emerged as one of the most obvious examples of overcapacity in the Southeast Asian market.

Airlines were overly ambitious and aggressive in applying for and using newly available traffic rights. Recent adjustments have brought much needed rationality to the market but capacity could start being added back, again putting pressure on yields and load factors.