Tourism recovery derailed by vanishing Indonesian tourists

As budget carriers cut capacity.

Forget the Mainland Chinese for a moment. A huge cloud is looming over Singapore’s tourism sector--after an extremely lacklustre 2014, the sector is again under threat from the prospect of vanishing Indonesian tourists.

According to DBS, the expected softness in Indonesian arrivals in the first half of this year should not be ignored as tourists from the archipelago make up 20% of all visitors to Singapore.

DBS believes that the key reason for this weakness is the 25% year-on-year cut in seat capacities by low cost carriers (LCCs) flying from Indonesia to Singapore.

“This is based on our analysis of LLC seat capacity over the last three years which shows growth in Indonesian arrivals when LCCs increase capacity and conversely declines when capacity is cut,” stated the report.