SIA

SIA: squeezed on both short haul and long haul segments? Asia-Pacific budget airlines AirAsia and Jetstar overtook full-service carriers in a brand-reputation survey as more passengers in the region turned to cheaper options amid a global economic slowdown. SIA and Cathay Pacific, among the world’s 10 biggest carriers by market value, were ranked below the two LCC air-travel operators, according to Nielsen and research firm Campaign Asia. This is another indication of the intense competition that the likes of SIA is facing from the budget carriers. The structural change in competition landscape could spell lower demand and margins for the incumbent full service carriers. Also not helping, IATA warns global airline profits are set to fall in 2012 by more than half to US$3b from US$7.9b last year, as recessions in the U.K., Spain and other European countries damp demand and erode gains from lower fuel prices. As a reminder, SIA posted an unexpected 4Qmar12 loss of $38.2m. It has since started a low-cost carrier, Scoot Air, that completed its first flight last month. Other full-service airlines that were ranked lower include Qantas, Australia’s largest carrier that forecast last month annual profit may fall as much as 91%, and Korean Air, South Korea’s biggest flier that slumped to a surprise first-quarter loss. SIA trades flat today at $10.46.