Singapore’s Airline Revival: High-Flying Profits Amid Looming Challenges
With record profits and high passenger demand, Singapore’s airline industry is thriving—but intensifying competition and supply chain woes could cloud its future.
Back in 2020, the COVID-19 pandemic was the “greatest challenge” Singapore Airlines (SIA) had ever faced, according to CEO Goh Choon Phong. The global crisis forced SIA, along with airlines worldwide, to ground flights, cut salaries, and even furlough staff. But over four years later, SIA and Singapore’s other airlines have rebounded dramatically. In May 2024, SIA reported a record profit of S$2.68 billion (US$1.99 billion) for the fiscal year ending March, rewarding employees with bonuses equating to nearly eight months’ salary.
Buoyed by a surge in post-pandemic travel demand, Singapore’s airline industry, which includes low-cost carriers Scoot and Jetstar Asia, has experienced significant growth. Scoot added two new Embraer aircraft in April to meet demand, with CEO Leslie Thng expressing confidence in the recovery of air travel. Jetstar Asia, too, anticipates surpassing its pre-pandemic passenger capacity by the end of 2024, expanding routes and increasing fleet sizes in response to soaring demand. “We’re excited about what lies ahead,” a Jetstar Asia spokesperson noted.
Despite this optimism, challenges remain. SIA’s recent financial statement hinted at increased competition and mounting pressures on revenue. Rising geopolitical tensions, an unstable economic climate, and global inflation are additional headwinds. Last month, Scoot faced disruptions when several flights were canceled due to supply chain issues and operational setbacks. The group’s difficulties were compounded when SIA faced a temporary suspension of flights to three Chinese cities, with analysts pointing to possible regulatory hurdles in China aimed at protecting local carriers.
The intense competition within the Asia-Pacific airline market further complicates matters. According to OAG’s Asia head, Mayur Patel, Southeast Asia has seen nearly a 60% increase in flight routes and a fourfold rise in low-cost carrier routes since 2011. This intense rivalry is pushing fares upward, driven by high demand yet limited capacity. “Consumers shouldn’t expect airfares to revert to 2019 levels anytime soon,” warned aviation analyst Brendan Sobie. While adding more flights would normally bring fares down, increasing operational costs mean higher ticket prices may persist.
In the midst of this boom, however, the industry’s workforce is stretched thin. Skilled labor shortages stemming from the pandemic add strain as airlines expand operations. SIA and its counterparts remain cautiously optimistic but are realistic about long-term profitability. Alan Lim of Alton Aviation Consultancy noted that while profits may dip in the future, airlines will continue adapting to navigate these turbulent skies.
As the industry celebrates its resurgence, it remains clear that Singapore’s airlines will need to brace for the looming challenges if they are to sustain growth in an increasingly competitive and complex market.
