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Some of Asia’s leading full service airlines reported worrying declines in passenger load factors in Aug-08, as demand continues to fail to live up to expectations. The outlook for premium demand is also wilting as global financial turmoil spreads.
Asia Pacific carriers’ passenger load factor growth (declines) (ppts change year-on-year): Aug-08
Source: Centre for Asia Pacific Aviation & company reports
Singapore Airlines’ (SIA) load factor dipped below 80% in Aug-08, down 2.2 ppts year-on-year to 79.4%, due to a combination of softening travel demand, “due to the weak US economy” and solid increases in capacity.
Singapore Airlines passenger load factor (%): Current vs previous 12 month
Source: Centre for Asia Pacific Aviation & airline reports
SIA expanded its available seat kilometres (ASKs) by 8.2%, as it added new aircraft to its fleet (including deployment of the larger A380 on the London, Sydney and Tokyo routes) and injected additional frequencies to Europe, South West Pacific, East Asia, Americas (Houston) and West Asia and Africa (Delhi, Chennai, Bangalore and Dubai).
Singapore Airlines’ systemwide passenger capacity growth (% change year-on-year): Sep-07 to Aug-08
Source: Centre for Asia Pacific Aviation & airline reports
All of SIA’s route regions recorded declines in passenger load factors, with the carrier noting uplifts for East Asia were additionally affected by stringent visa restrictions for travel in and out of China during the Beijing Olympics.
Singapore Airlines’ passenger load factors by region (%): Sep-07 to Aug-08
Source: Centre for Asia Pacific Aviation & airline reports
Security arrangements for the Olympics played a role in savage reductions in passenger load factors recorded by Chinese carriers last month. Air China’s international load factors slumped 13.8 ppts to 69.9%, as passenger numbers fell by almost one quarter (-24.3%) – not the outcome the airline may have expected when it signed up to become the official Olympic Games carrier several years ago. Air China’s domestic passenger numbers also fell 14.7% last month, resulting in a 12 ppts fall in load factor.
Air China’s international and domestic passenger load factor growth (ppts change year-on-year): Sep-07 to Aug-08
Source: Centre for Asia Pacific Aviation & company reports
China Southern was also hit hard, with an 8.7 ppts reduction in its overall load factor last month.
China Southern Airlines’ systemwide passenger load factor growth (ppts change year-on-year): Jan-07 to Aug-08
Source: Centre for Asia Pacific Aviation & company reports
The final word goes to Cathay Pacific, which carried just 0.5% more passengers in Aug-08, despite growing capacity (ASKs) by 14% year-on-year. General Manager Revenue Management, Tom Owen, stated, the Beijing Olympics and the impact of the two typhoons that hit Hong Kong had a “negative impact on passenger numbers for the month”.
Cathay Pacific’s passenger load factor growth (declines) by region (ppts change year-on-year): Aug-08
Source: Centre for Asia Pacific Aviation & company reports
More ominously, Cathay warned premium demand “continues to show signs of softening in the months ahead”.
Last night’s rout on global stock markets on fears of further financial sector upheaval and talk of a global recession will raise the pressure on Asia’s carriers to revisit their capacity plans, despite the recent falls in the oil price.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales. She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
