Southeast Asia Airline 2019 Outlook: In this fast growth market low costs are essential

Southeast Asia has been a market of rapid growth but meagre profits over the past few years and the outlook for 2019 is more of the same. In fact, profitability will likely slip further following a deterioration in market conditions in 2H2018.
Of 20 publicly traded airlines or affiliates based in Southeast Asia, only six were in the black for 3Q2018 and 19 recorded a decline in profitability compared to 3Q2017. Intense competition and a generally price sensitive population made it difficult for airlines to pass on higher fuel costs.
While fuel prices have again been on the decline in 4Q2018, there can be no predicting where fuel costs will trend in 2019. What is certain is that competition will remain fierce in Southeast Asia, pressuring yields as airlines struggle to find profitable markets for deploying additional aircraft. In this environment, fuel prices are pivotal and the lowest cost operators prevail.