SIA set to benefit as AirAsia's woes intensify

Passengers might soon ditch budget carriers.

The Singapore Airlines Group is an unintended beneficiary of budget carrier AirAsia’s mounting woes. UOB Kay Hian noted that SIA could gain market share at the expense of the beleaguered low-cost airline.

The report stated that passengers might make a switch to full-service carriers (FSCs) as AirAsia’s woes mount. The group, which is composed of SIA, Scoot, Silk Air and Tigerair--has the highest absolute seating capacity among ASEAN full-service carriers.

As 37% of the SIA group’s seating capacity is slated towards the ASEAN, the group could soon see see increased loads on short-haul ASEAN routes and thus increased profitability.

UOB Kay Hian also added that SIA’s ability to hedge fuel will also enable it to lock in costs and improve margins.