SIA, Cathay due to lag behind on post-COVID recovery

Analysts suggest that the recovery time for some of the international aviation community’s biggest players, namely Singapore Airlines and Cathay Pacific Airways, will “inevitably” be prolonged compared with the rest of the industry, due to having no domestic market to fall back on.

Joanna Lu, head of consultancy for the Asia region at aviation data analysis company Cirium, told US media that both international airlines are due to suffer for a longer period than most, as they have no domestic network to rely on until international travel returns to pre-COVID levels.

On the other hand, Lu noted that the domestic and regional travel markets around the globe are likely to bounce back far quicker than long-haul and international routes.

“Those airlines that are serving a great scale of domestic market would probably gain more benefit from it, including carriers in China, Japan and maybe Indonesia,” she said.

Many airlines, including Cathay and Singapore, have shifted focus to the transportation of cargo, Lu said, however this is still not sufficient to offset the extreme loss experienced by both airlines without any local passenger demand.

The International Air Transport Association also said in June that the Asia-Pacific region is expected to record “the largest absolute losses” of the global aviation industry in 2020.

Lu explained that the disruption to international travel has been the “major cause” of “negative progress” in the industry in the Asia-Pacific region.

However, she said that the region, being composed of so many individual countries and markets, was at a disadvantage for growth.

Meanwhile, she stated, Europe and the US have “pretty much been operating as a single, united domestic market”, facilitating better recovery and growth prospects.

Like many airlines around the world, both Singapore and Cathay recorded a loss in their latest earnings updates.

Cathay Pacific reported a loss of US$1.27 billion for the first half of 2020. This comes after the airline recorded a profit of US$174.2 million in the previous year.

Meanwhile, Singapore Airlines, for the quarter ending 30 June, reported a net loss of US$816.5 million, down from a net profit of US$81 million the previous year.