High oil prices are putting the squeeze on airlines worldwide, and passengers are seeing fuel surcharges tacked onto tickets as executives keep a nervous eye on the bottom line. \nBut low-cost budget air carriers taking off around Asia see little choice but to press ahead. They're pushing on with expansion plans and insist they can still beat their bigger, established rivals on price. \n"Our fuel bill is small because we're small," said Sim Kay Wee, chief executive of Singapore-based Valuair, which has two Airbus A320s and flies daily to Hong Kong, Bangkok and Jakarta. "It's not as bad as if you're a big oil drinker, but we're riding the roller coaster, so to speak." \nEven though Valuair's fuel bills are rising, it plans to double its fleet with two new jets, offering more services to Hong Kong and new ones to the western Australian city of Perth and Guangzhou, China. \nWhile expensive oil is a particularly sharp blow for airlines, rising demand is helping carriers offset bigger fuel bills by increasing their revenue, said regional aviation consultant Peter Harbison. \nValuair recently had to raise its fuel surcharge on tickets to S$8 (US$4.75) per flight sector, but Sim says he can still keep his tickets about 20 percent to 30 percent cheaper than bigger carriers like Singapore Airlines. \nPerhaps the best-known regional budget carrier, AirAsia, has not added on any fuel surcharges and it's moving forward with plans to sell shares on the Bursa Malaysia stock exchange as early as next month. \nThe Kuala Lumpur-based AirAsia launched services in 2002, modeled after no-frills US carrier Southwest Airlines, which has successfully weathered the ups and downs of the business for decades. \nHarbison said the impact of high fuel prices is being felt across the industry, though some larger carriers might be better protected after hedging their fuel costs in the futures market. \nOthers who didn't hedge are feeling more pain, said Harbison, managing director at the Center for Asia Pacific Aviation in Sydney, Australia. \n"Once fuel prices went north of US$40, very few carriers were ready to hedge at that stage," Harbison said. "They thought, `We have to bear some pain for a while and ride this out.'" \nAirlines can hedge their fuel costs by agreeing to buy in the future at a specified price. If the actual market value of jet fuel rises, they save money on their purchases, but if it falls, the money they lose on the futures trade is covered by their lower cost for actual fuel.
ELECTRONICS Lite-On delays sale of unit Lite-On Technology Corp (光寶科技) yesterday said it would postpone the sale of its solid-state drives (SSD) business to Kioxia Holdings Corp, formerly known as Toshiba Memory Holdings Corp, due to disruptions amid the COVID-19 pandemic. Last year, the Taiwan-based electronics components supplier struck the deal with the Japanese firm, agreeing to sell the unit for US$165 million. Citing unfinished integration work due to the pandemic, Lite-On has deferred today’s closing date until further notice, adding that the delay would not have a negative effect on the unit’s operations. AUTO PARTS Hiroca approves dividend Automotive interior parts supplier Hiroca
NOT ALL GOOD: Analysts warned that other data for last month might be less rosy due to the virus and analysts expect the PMI to contract again next month Chinese factory activity saw surprise growth last month as businesses went back to work following a lengthy shutdown, but analysts said that the economy faces a challenging recovery as external demand has been devastated by the COVID-19 pandemic, while the World Bank said that growth could screech to a halt. China is slowly returning to life after months of tough restrictions aimed at containing the virus, which put millions of people into virtual house arrest and brought economic activity to a near standstill. The strict measures saw a closely watched gauge of manufacturing plunge to its lowest level on record in February,
ALL ABOUT STRATEGY: The company is optimistic, saying that its gross margin should increase year-on-year, but it is scaling back on its plans to expand capacity Quang Viet Enterprise Co (QVE, 廣越), which makes down jackets and garments for sportswear and outdoor brands including Adidas AG, yesterday said that revenue might drop 5 to 10 percent annually this year as some customers trimmed orders in response to the COVID-19 pandemic. That would mark its first revenue decline since 2016. Quang Viet posted record-high revenue of NT$16.26 billion (US$537.45 million) last year, up 22 percent from 2018. Down jackets made up 40 percent of it revenue last year. North Face Inc and Patagonia Inc are this year likely to reduce orders by 20 to 30 percent from a
Taipei 101, one of the nation’s leading shopping centers, is planning to reduce its business hours due to decreased demand amid the COVID-19 pandemic. Taipei 101 is to open daily at noon and close at 9pm from April 6, building management said in a statement on Monday. The shopping center has been opening at 11am and closing at 9:30pm from Sunday to Thursday, while closing at 10pm on Friday and Saturday. The restaurants in the food court — on the basement level — would adjust their business hours as necessary, but the supermarket would continue to open at 9am daily, management said. The shopping