Disruptive technologies bring turbulence for traditional airlines
Carriers face headwinds despite benign performance in the tourism industry as they begin to face similar pressures to those exerted on hotels
The skies ahead for carriers in Hong Kong and elsewhere in the region look gloomy, if not downright stormy.
Cathay Pacific, Asia’s biggest international airline, is bracing for tough times ahead as a lethal combination of weak economic outlook, low demand and stiff competition force carriers to slash fares to fill seats.
The airline posted a dismal performance for the first half of 2016, with net income down 82 per cent. Full-year profit figures are also expected to drop on the back of overcapacity and intense competition.
Over in Singapore, the mood has been equally bleak. In November, Singapore Airlines posted a 70 per cent plunge in net profit for the second quarter.
The International Air Transport Association (IATA) expects profits among airlines in the Asia-Pacific region to fall 13.7 per cent in 2017 to US$6.3 billion.
The irony is that the travel industry in Hong Kong and Singapore is doing well. Asian airports have been reporting healthy traffic and flights within the region dominate rankings of the world’s busiest international air routes.