THIN PROFIT MARGINS
Asian airlines may have to reduce luxuries to survive rising fuel cost
In order to survive some Asian airlines may be forced to copy US low-cost carriers and charge for extras
Sydney — Some of Asia’s marquee airlines, which spoil passengers with free alcohol and in-flight entertainment, may soon have to kick the habit. The onboard giveaways, famously rolled out to every passenger in the 1970s by Singapore Airlines, will be unsustainable for some carriers as production cuts announced last week by the Organisation of Petroleum Exporting Countries (Opec) drive up the cost of fuel, according to aviation analysts. Other options include cutting unprofitable routes, retiring fuel-guzzling aircraft as well as raising fares. The deal reached by Opec on November 30 could not have come at a worse time for carriers such as Cathay Pacific Airways and Singapore Air, which are battling excess capacity and declining premium traffic. Asian operators are also particularly vulnerable to rising fuel costs as their profit margins are about half those of their North American peers after competition pushed down fares. In order to survive, some Asian airlines may be forced to ap...
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