Bloomberg: “The Decline and Fall of Asia’s Airline Empires” (Singapore Airlines & Cathay Pacific)

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Bloomberg ran an interesting article couple of days back about the “fall” of Singapore Airlines and Cathay Pacific and how these airlines are squeezed both by the ME3 (Emirates, Etihad and Qatar Airways) and Chinese carriers (China Eastern, China Southern, Hainan, Air China etc,).

Bloomberg “The Decline and Fall of Asia's Airline Empires” (Singapore Airlines & Cathay Pacific)

Singapore and Hong Kong airlines both neither have their government backing (all ME3 do) nor can they rely on local market (both rather small).

You can access the Bloomberg article here of which below is an excerpt:

In their heyday, Singapore Air and Cathay lost little sleep worrying about their rivals in China and the Persian Gulf. Nowadays, they can’t afford not to: China Southern Airlines Co., China Eastern Airlines Corp., Air China Ltd., Emirates Airline and Qatar Airways Ltd. all exceed them in capacity terms, and Etihad Airways PJSC is rapidly catching up.

That’s left the two cities’ airlines exposed. Long-haul international aviation is a cutthroat business, and its best practitioners historically have had either state support or an easily dominated domestic market at their backs. Cathay and Singapore have never had the latter, and it’s a hotly contested debate whether they benefit from the former — especially when compared with their aggressive new state-owned competitors.

Staying in the game has required cutting ticket prices to worryingly low levels. Yield, a measure of revenue per passenger, per kilometer, fell to its lowest level since 2009 at Cathay in the six months ended in June, and the 2016 fiscal year figure at Singapore Air was the weakest since 2010.

Conclusion

Whenever I am buying economy and business tickets, Cathay Pacific and Singapore Airlines rarely offer competitive fares from Europe compared to ME3 or even European airlines.

I managed to buy one-way Cathay Pacific business fare from Helsinki to Ho Chi Minh City for the new year last year and one one-way Singapore Airlines ticket from Santiago to Kathmandu. The latter was probably some sort of pricing snafu and the Cathay ticket was $1,400 range when cheapest reasonable economy ticket would have been $1K.

For intra-Asia flights, I tend to use one of the low cost airlines when the flight times is less than couple of hours and Malaysia Airlines has had very good business class fares for travel within the region throughout the 2016 (let’s hope that they stick around).

If the Chinese carriers ever get their product in order (still leaves lot to be desired), they certainly can take quite a bite of the market between Asia and North America/Europe. Already their economy fares are most of the time unbelievably low (not for the faint-hearted).

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