Singapore Airlines, the home carrier of the city-state, recently issued a warning that has cast a shadow over the Singapore Airshow. The airline announced that ticket prices were coming under pressure as costs were also rising. This news sent its shares down nearly 10% on Wednesday, marking the Asian airline's biggest one-day share price plunge since the global travel industry ground to a halt in March 2020 due to COVID-19.
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The warning came after Singapore Airlines' December quarter earnings missed market expectations. While the carrier's net profit remains strong, it has fallen for two consecutive quarters after reaching a record in the June quarter last year, buoyed by strong post-pandemic summer travel demand. This development underscores broader aviation industry concerns about supply chain constraints and a more cautious outlook in Asia. China's international travel recovery from the pandemic is happening slower than in much of the rest of the world.
As Airbus, Boeing, and COMAC of China looked to seal aircraft purchase deals at Asia’s biggest aviation gathering, Singapore Airlines highlighted that high fuel prices, inflationary pressures, and supply chain constraints were presenting challenges to airlines globally. The carrier's warning followed a similar announcement by Air New Zealand on Monday, which flagged weaker-than-expected results in the six months through June due to challenges from engine maintenance requirements, economic and inflation risks, early signs of softness in domestic demand, and intense competition on US routes.
US-China flight capacity remains more than 75% below pre-pandemic levels this month, according to aviation data provider OAG. Services are being restored slowly amid tensions between the governments. In the meantime, US carriers have sent more long-haul aircraft to Australia and New Zealand, pressuring fares in those markets. Other challenges for airlines include the need to ground some planes for engine inspections to check for potentially flawed components. For instance, Philippine low-cost carrier Cebu Pacific has 10 Airbus A320neo family planes out of service as workers check RTX subsidiary Pratt & Whitney’s GTF engines. In conclusion, the warning from Singapore Airlines has indeed cast a shadow over the air show, highlighting the various challenges that the aviation industry is currently facing. It remains to be seen how these issues will be addressed and their impact on the future of air travel.