Singapore short-haul LCC market remains challenging despite adjustments at Jetstar Asia and Tigerair

Overcapacity continues to impact Singapore's LCC sector, pressuring yields and resulting in unsustainable losses. But the market could start to see improvements in 2015 driven by capacity adjustments and increased reliance on partnerships.

Singapore's two short-haul low-cost carriers, Jetstar Asia and Tigerair, have both been unprofitable since early 2013 as the market failed to absorb a surge in capacity. But Tigerair has started to reduce capacity in recent months while Jetstar has modestly increased capacity without increasing its fleet.

Both LCCs meanwhile are expanding transit traffic and partnerships. By relying less on Singapore's relatively limited local market, Jetstar Asia and Tigerair Singapore should be able to eventually improve yields to a sustainable level.