Airlines to face headwinds in 2012

Singapore Airlines shares with Singapore Business Review next year’s outlook for the airline industry.

1. What are the likely challenges?

The prevailing economic uncertainty and weak consumer confidence has had an impact on demand for air travel. We are seeing signs of weakness in advance bookings, especially in Europe and United States. As a result, we expect our passenger and cargo yields to remain under pressure in the near term. Jet fuel prices remain a major challenge for airlines, as it remains high and volatile.

2. What are the growth opportunities?

Even in this difficult operating environment, we continue to be on the lookout for opportunities for measured growth, in markets where demand for air travel remains strong.

3. How do you respond to some pressures on profitability due to higher costs and greater competition?

We continue to exercise cost discipline within the Group, even as we continue to invest in maintaining the high standards of our products and services. We will also manage greater competition in the same way, by strengthening our offerings and competing on the basis of our established strengths - stellar service, product innovation and a diverse route network.

4. Are you seeking inorganic growth opportunities like M&As?

As you may be aware, transnational mergers and acquisitions by airlines is generally a complex enterprise due to existing regulations about airline ownership. But as we have always said, we will consider interesting opportunities that may arise.

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