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Based at Singapore Changi Airport, Singapore Airlines is the national carrier of Singapore. Using a fleet of wide-body Boeing and Airbus aircraft, including the A380 of which Singapore Airlines was the launch customer, Singapore Airlines operates an extensive network across Asia, North America, Australasia, Europe, Africa and the Middle East. Singapore Airlines joined the Star Alliance on 01-Apr-2000.
Location of Singapore Airlines main hub (Singapore Changi Airport)
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1,806 total articles
318 total articles
A confluence of factors is seeing Chinese short-haul tourists avoid Southeast Asia and instead favour Northeast Asia. Arrival figures at Southeast Asia's three key markets for Chinese tourists – Malaysia, Singapore and Thailand – are reporting fewer Chinese tourists than in 2013 while North Asian markets are reporting growth, often above 2013's growth. Consequently Southeast Asian airlines are suffering weakened yields and low load factors.
The political situation in Thailand is impacting arrival figures there while Malaysia has seen a sharp downturn due to the MH370 incident, with many Chinese believing conspiracy theories while others are avoiding Malaysia in a de facto protest. The cumulative impact is a 20% decline in Apr-2014 arrivals, the latest available.
Singapore has been caught up in this anti-Southeast Asia feeling, experiencing a 39% decline in Apr-2014 and 17% for the year so far – an even larger decline than in Malaysia. Vietnam-China tensions flared in May-2014, but Jun-2014 arrival figures still show 6% growth in Chinese tourists, although this is well down from the 43% growth in the year to May-2014.
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.
Air freight is critical to Asia’s major airlines but with regional nuances. The North America market is critical for Korean Air; the region accounts for 42% of AFTKs compared to a smaller 27% at Cathay Pacific. For Singapore Airlines, Australia-Pacific is larger. China and Japan are large countries for Korean Air based on payload capacity while for Cathay Pacific large markets include India and the UAE, according to CAPA’s new Freight Schedule Analysis tool.
For all of the market’s differences, there are commonalities in freight’s under-performance. New passenger flights challenge freight load factors, which are the highest in Asia-Pacific but still barely exceed 50%.
Additional passenger flights, all with substantial belly capacity, stunt all-freight improvements. Asia’s major airlines have 28 parked freighter aircraft, mostly 747s. The mood is further dampened with 5.2% FTK growth in Asia-Pacific, possibly set to slow as China and Asia’s emerging markets see reduced output.
Singapore Changi Airport is aiming to stimulate traffic growth through a series of incentives and rebates. The initiative comes in response to slower growth and a perceived widening cost gap with other Southeast Asian airports.
Changi has set aside SGD100 million (USD80 million) for its new Growth and Assistance Incentive (GAIN) programme, some of which will be used for rebates on parking and aerobridge fees. Some of the funds will also be used to provide incentives for transfer traffic as part of a programme that has not yet been detailed.
Singapore’s passenger traffic growth has slowed to only 2% in the first five months of 2014. Even slower growth is possible for the remainder of 2014 driven by a recent drop in inbound visitor numbers from China and a slowdown from Indonesia.
Air New Zealand is entering FY2015 on a high note. It starts the year having delivered what management expects will be an annual profit in the year to 30-Jun-2014 in excess of NZD300 million (USD262 million), the largest profit for Air NZ in a decade. Although not large in global terms, it should be seen in perspective; Air NZ is a small airline. But despite all the difficulties faced by a small airline at the end of the line, small can be beautiful: the projected profit represents a return on equity in excess of 15% - up from the 11% return anticipated by the market was expecting at the start of CY2014.
Although predictions can be dangerous in a turbulent industry, Air NZ is poised for earnings growth as it moves from five fleet types to two, implements capacity growth and makes a number of other improvements. Since the FAA and EASA certified the 787-9 on 16-Jun-2014, Air NZ can now prepare to receive its first of type (for which it is the launch customer) and plan network improvements with the much-awaited aircraft. It is an early birthday gift as Air NZ will mark its 75th anniversary in FY2015.
Asiana Airlines' losses continue in 1Q2014 as capacity growth drags down yields despite fuel savings
Asiana Airlines continues to diverge from Korean Air, which cut capacity and grew revenue while returning to the black. Not so for Asiana, which in 1Q2014 grew capacity but reported a 4.1% international yield decrease. While its situation improved, Asiana remained in the red. Lack of stability in the Korea-China and Korea-Japan markets, large in overall size and yield, continue to impact Asiana.
Asiana benefitted from reduced fuel costs, but unlike Korean Air did not display large cost discipline in other areas of its business.
Further changes do not paint a rosy picture as North Asia-Southeast Asia and North America-Asia competition increase. Asiana wants to reduce its exposure to short-haul traffic, requiring growth in long-haul services as well as to Southeast Asia for transfer traffic. Incremental long-haul expansion is occurring to Istanbul, Paris and Seattle while Asiana's recently-delivered A380 will help accelerate long-haul growth.
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