Chart of the Day: LCCs to suffer cuts in seat capacity in 1H15

Tourism arrivals will continue their downtrend.

Last January, Indonesian arrivals fell 17% YoY while Chinese visitors were slashed by 25%.

According to a report by DBS, based on CAPA data, seat capacity in 1Q15 and 2Q15 from Indonesia to Singapore is projected to decline 16% and 8% y-o-y, respectively. More importantly, LCCs’ seat capacity is expected to suffer cuts of 30% and 18% over the respective quarters.

Analysts at DBS believe this would translate to decline in Indonesian and overall tourist arrivals at least in the 1H15.

This weak trend can be seen in the latest January 2015 STB statistics, where Indonesian arrivals fell 17% y-o-y on the back of a 24% decline in Indonesian arrivals by air. This in combination with the still weak Chinese visitors (-25% y-o-y), saw overall number of tourists drop 7% y-o-y.

Here’s more from DBS:

Second Trade Minister S. Iswaran in his recent parliamentary address revised the outlook for tourist arrivals in 2015. Compared to STB’s previous target of 17m visitors, the Singapore government now expects between 15.1-15.5m visitors, a 0-3% change from 15.1m visitors last year. The key reasons for the change in forecast are weaker than expected performance in 2014 (-3.1% y-o-y) and a more challenging environment given heightened competition from other tourism markets.