With seat capacity overhang, cut-throat competition and profit margins under pressure, Asia continues to be an extremely volatile market for airlines, a top industry official said today (Nov 23).
"In 12 months, we have seen huge shifts in the way markets perceive the value of airlines and that"™s really a symptom of massive competition, massive increases in capacity. In the interim, while the market catches up to capacity, we are seeing huge swings in profitability and operational problems," said Mr Conrad Clifford, International Air Transport Association"™s (IATA) Regional Vice-President for Asia Pacific at the CAPA Asia Aviation Summit in Singapore.
The outlook is still good despite the challenges, he said, noting that carriers will react, innovate and evolve in the new competitive environment, citing the example of flag carrier Singapore Airlines (SIA).
"They (SIA) have done a lot of things to change their models and react and evolve in the face of low cost carrier (LCC) competition and they have done it successfully," he said.
The LCC sector in Southeast Asia is grappling with short to medium term challenges resulting from surplus capacity, softening economies and infrastructure constraints which have had a dampening effect on the airline industry, said Mr Con Korfiatis, partner at professional services firm Korfiatis Heidrick & Struggles…
