Handling brimming loads would spell doom or delight for Singapore’s airlines, say analysts

Could airlines sustain overflowing pax loads?

Singapore’s flag carrier, together with its budget-airline counterpart, has seen its pax loads improve since this July. However, analysts says the concern now shifts to how these airlines handle these increased loads.

According to analysts from UOB Kay Hian, the airlines’ ability to maintain high loads/utilisation will be critical to earnings growth, as Singapore Airlines’ and Tigerair’s pax loads have averaged 83.7% and 84.1% respectively for the recent 2Q.

“While encouraging, sustainability of the higher load factors remains a key question. Both airlines have been cutting excess pax capacity (SIA: - 2% ytd, Tigerair: -3.6% ytd) and this helped to improve loads,” UOB Kay Hian said.

However, UOB Kay Hian adds that both carriers’ loads also flattened in September, after two months of improvement.

“It remains to be seen if loads can be maintained over the next two quarters amid intense competition. In Oct 15, SIA’s pax loads improved by 1.8ppt yoy, while Tigerair’s pax loads grew marginally,” UOB Kay Hian added.