Page 10 - AAA JANUARY - FEBRUARY 2017 Online Magazine

FEATURE AIRLINE FORECAST

A rise in oil prices and increased to have smoothed out in mid-2016, with are under pressure: Malaysia Airlines, Thai
protectionism of aviation markets premium yields often – but not always – Airways and Singapore Airlines have flat to
could impact the growth plans of
Asian airlines insulated. Some airlines face significant reduced capacity over recent years. In SIA’s
premium yield challenges.” Harbison cautions case, it has shifted growth to regional and
that the low fuel price has boosted most LCC units. Cathay Pacific is slowly growing
airlines, and even kept some afloat – buying but warns of a “new normal” that requires
them time. “Yet for a few airlines unable to an adjustment for the long term; things will
be financially strong during the period of low never be as they were. Collectively Asia’s
fuel prices, the inevitable change in operating full service airlines are being pressured
environment poses significant risk. This is a between the Gulf super-connectors, LCCs
cyclical industry, like it or not.” and Chinese airlines.” Certainly, Asian carriers
Another worrying factor is that the low are being impacted by the three middle-east
fuel prices which have given airlines some of mega carriers – Emirates, Qatar Airways
the best profits ever have prompted some and Etihad Airways. They have continued to
labour groups to ask for their share of the expand at a rapid rate and have also heavily
benefits. “This risks building increased costs discounted fares lowering passenger fare
into airlines, making a recovery challenging expectations.
once oil prices rise.” Harbison also warns that Emirates show no sign of slowing its
Asia is in flux. A380 delivery program and all three have
“All ten of the world’s largest routes, and significant orders in for the Boeing 777-8
six of the next ten, are in Asia, but seven of and -9 for delivery from 2020. Both Qatar
the ten largest airlines are in Europe or the and Etihad also have significant numbers
US, reflecting the densification in Asia and of 787s and A350s on delivery that they are
predicating the coming shift in the global using to open new routes or up-gauge on
balance of power.” “Yet Asia’s flag carriers exiting routes. However, while the middle-
10 ASIAN AIRLINES & AEROSPACE JANUARY / FEBRUARY 2017 WWW.GBP.COM.SG/AAA