Southeast Asia Aviation 2018 Outlook

More rapid growth, low profit margins and intense competition

Southeast Asia is a region of rapid growth and huge potential. Passenger traffic in Southeast Asia grew by approximately 10% in 2017, when at least half of the region's 10 countries recorded double digit growth.
However, it is also a region of intensifying competition and several markets suffer from overcapacity. Yields have been steadily declining for the past few years, resulting in very low profit margins, despite low fuel prices and relatively high load factors.
Yields are now showing some signs of stabilisation, but are not likely to increase sufficiently to offset higher fuel prices. 2018 will be another year of good growth and meagre profits for the Southeast Asian airline sector.

Summary

• The Southeast Asian airline sector is profitable, but margins were very thin in 2017 and are not about to improve in 2018;
• Southeast Asia has strong traffic growth, but overcapacity remains a challenge, pressuring yields;
• The Southeast Asia fleet grew by another 6% in 2017; the rate of capacity and traffic growth was even faster;
• The outlook for 2018 is mixed, with solid growth but continued overcapacity, which means profits will be meagre;