Source: Channel NewsAsia Author: Desmond Wong 02/18/2009
Subject Concerned: Government Opinion Airlines
The economic slowdown and fall in consumer spending has hit airlines hard with demand for travel slowing. Experts said national or flag carriers and airlines with domestic markets are better positioned to survive the downturn.
Airlines such as Thai Airways and Air India typically receive support from their respective governments. But experts said they should not become complacent or overly reliant on this support.
They said carriers like Malaysia Airlines have benefited from striving to be as independent as possible.
Nicholas Ionides, regional managing editor, Flight (Asia), said: "The government didn't meddle in everything that they did and they allowed it to change. Malaysia Airlines has emerged strongly as a result of it and they're continuing to adapt their business.
"They're a good example to look at of a state-owned flag carrier that is not being complacent and saying 'we always have the government to fall back on'."
Malaysia Airlines also began offering low fares on domestic routes in 2008 to prop up demand.
Observers said that having a domestic market is another advantage as this guarantees a basic level of demand. This is where a purely international player like Singapore Airlines, despite being a flag carrier, will have to work harder to be competitive.
Shukor Yusof, aviation analyst, Standard & Poor's, said: "For SIA, it's a purely international airline. There is no domestic business like Malaysia Airlines, Thai Airways, Garuda - who have a buffer in terms of flying people domestically. They are big countries. But here, the moment you take-off, you're in international airspace."
Experts said that the most vulnerable airlines could be the privately run players who lack the capital base to outlast the crisis.