Asia’s air travel is booming but it shows troubling signs
Nearby, the melody seems to be the same – Philippine Airlines are running at a loss since 2016 as its earnings fall further, while Malaysia Airlines have been circulating in the rumors for a buy-out, while the Malaysian government has been even lingering around with the idea of shutting down the airline. Thai Airways, Korean Air and Asiana Airlines are also posting losses.
While Boeing, Airbus, IATA and many others point to growing passenger numbers in the region, financial losses within the region are a rather worrying trend, especially for mainline airlines.
Pressure from the East
Over the past few years, airlines like Etihad, Emirates, Qatar Airways and Singapore Airlines (SIA1) (SINGY) have become synonymous with luxury travel. The four carriers, while different, have one thing in common – the Asia-Pacific market is crucial for them.
For Emirates, the region accounts for 36.3% (27.7% East Asia and Australasia, 8.6% West Asia and the Indian Ocean) of total revenue. Also, the Middle East airline has 23 codeshare partners as of March 31, 2019. Out of those 23, nine airlines are based in the Asia-Pacific region.
While Etihad is not as transparent as Emirates is, as the former has a much more in-depth financial results sheet, Etihad has made very strong in-roads in Asia, especially India. The Abu Dhabi-based airline has recently celebrated 15 years in India, calling it “the largest and busiest market”. The airline also held a minority stake at Jet Airways before it fell apart. Furthermore, Etihad has announced that its strengthening its presence in “the fastest growing air transport region in the world”, as the airline introduced an Airbus A380 on the Abu Dhabi International Airport (AUH) – Seoul Incheon Airport (ICN) route.
Qatar Airways had a fairly bumpy flight these past few years, as a blockade imposed on Qatar forced the carrier to adjust its flight paths. Nevertheless, its expansion westwards is prominent, as Qatar Airways plans to offset the losses of 18 destinations due to the blockade. In 2018, the airline announced new routes to Malaysia and Thailand, while additional destinations to the Philippines and Vietnam are still pending.
Singapore Airlines (SIA1) (SINGY) , just like Etihad, has heavily invested in the Indian market. Together with Tata Sons, SIA launched the Indian airline Vistara in 2013. The Indian branch of Singapore Airlines Group will soon launch international destinations and it plans to introduce 50 Airbus A320 family aircraft, while also adding in six Boeing 787-9 Dreamliners. However, the endeavor is so far unsuccessful – since it launched flights in 2015, Vistara’s financial reports only indicated losses. Reportedly, in FY19, the airline’s losses were equal to $11.5 million (₹831 crore), doubling its negative result from FY18.
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