Singapore Airlines is falling behind Cathay Pacific as Asia's network airline giants diverge

Asia's aviation axis has shifted from Singapore Airlines (SIA) to Cathay Pacific as the region undergoes both cyclical and structural change. SIA is more exposed than Cathay to the weak economies of Europe while Cathay can more effectively serve North America, currently a strong market. Cathay's Hong Kong hub is far better suited to capturing Chinese growth than is Changi, and Hong Kong's more northerly location than Singapore means diversions through the Middle East on Gulf carriers are less of a threat than at SIA.

Cathay's decision to offer premium economy - which SIA is still hesitant to do - is bearing fruit. SIA however has made more significant and bolder change than Cathay, embarking on new partnerships and launching long-haul LCC Scoot. These will take time to mature - Scoot especially.

These factors are unlikely to change in the short term, but the long term contains much greater uncertainty. The possibilities of deep partnerships, acquisition, consolidation, changes in bilaterals or a surge in growth out of India and Indonesia, to name but a few, could potentially re-balance not only SIA and Cathay, but all of Asian - and probably global - aviation. This report looks at where Cathay and SIA compare today and what the future may hold as they pursue different strategies.