Why SIA stands to benefit from the diversion of Chinese traffic from South Korea

It could give local tourism a boost.

Singapore Airlines is a potential beneficiary of a diversion of Chinese traffic from South Korea, according to a report from UOB KayHian.

Citing a report from Bloomberg, the UOBKayHian report said China has asked tour agencies to limit travel to South Korea, in an apparent retaliation against South Korea’s deployment of Thaad missiles.

"Whilst we are unable to verify the accuracy of the report, we think Singapore’s tourism could receive a boost if it pans out," the report said.

UOB KayHian explained that 2 million Chinese visited Singapore in 2016, a fraction of the 8 million who visited South Korea.

"Even a 5% diversion of South Korea’s Chinese traffic to Singapore would lead to a 20% rise in Singapore’s Chinese tourist arrivals, which could directly benefit SIA given that it has a 52% market share out of Changi," the report noted.