As US Airways filed for bankruptcy protection and other industry giants announced cutbacks to cope with mounting losses this month, Singapore Airlines inaugurated a new service between Singapore and Las Vegas.
Less than a year after the Sept. 11 attacks on the US devastated an industry already racked by global recession, Singapore's flag carrier is prospering. It is not alone. In many Asian countries, airlines are benefiting from lower fuel costs, resilient tourist traffic and a strong recovery in cargo shipments.
"Relative to what is happening in the US and Europe, Asia is a paradise for airlines," said Jean-Louis Morisot, an analyst at Goldman, Sachs here.
This month, Korean Air Lines said it had reversed a loss, posting a first-half profit of US$163.9 million. Cathay Pacific of Hong Kong, which never slipped into the red, reported that first-half profit rose 6.8 percent, to US$180.8 million. Singapore Airlines said in May that in its last fiscal year, ended March 31, it had net profit of US$361.2 million; that was down 61 percent, largely on losses from foreign holdings, but well beyond analysts' expectations. Thai Airways said last week that net profit in the quarter ended June 30 more than quadrupled, to US$82.4 million.
The relatively good airline news extends to Australia, where the country's largest carrier, Qantas Airways, has benefited from a commodity-driven boom -- as well as the collapse of Ansett, its main rival for the domestic market. On Wednesday Qantas announced it would start a new airline, a low-cost service for leisure travelers, and said that net income rose 3 percent, to US$233.8 million, in the year ended June 30, despite some continuing labor problems.
Such numbers are likely to look even better when compared with those of US airlines in the dire quarter that followed the terrorist attacks, analysts say. They added, however, that the prospect of a further slowdown in the American economy, or, even worse, a double-dip American recession, could take a big toll on Asian carriers.
Another problem, particularly for the carriers with small or no domestic markets, is breaking into new markets elsewhere.
This year, though, Asian airlines have been getting a big boost from falling prices for jet fuel, typically the biggest expense for Asian airlines, said Amit Thakar, an analyst at SG Securities in Singapore. Lower global demand for jet fuel after Sept. 11 has left prices 10 percent lower than they were last year, and rising Asian currencies have made it cheaper still for the region's airlines to keep planes flying. Singapore Airlines alone will save US$200 million on fuel this year, Thakar estimated.
The countries' stronger currencies -- and growing economies -- have inspired a consumer-spending boom around Asia, including a recovery in leisure travel. Singapore, for example, expects more than a million visitors from China this year, double the number that came last year. Thailand also expects an increase, and Thai Airways and Singapore Airlines have both added flights to China. Cathay has applied to resume flying to the mainland after a 12-year hiatus.
The tourism boom benefits some airlines more than others. Premium airlines like Singapore Airlines and Cathay rely more on their vaunted business class, a sector that analysts say has yet to rebound. Airlines have also been discounting fares, according to Morisot at Goldman, cutting the profitability of carrying passengers.
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