MANILA, Philippines–Philippine carriers performed better than most of their counterparts in Southeast Asia in 2014, as they benefited from favorable market conditions, the CAPA Center for Aviation said in a report Tuesday.
Data compiled by CAPA showed that only six of 18 Southeast Asian carriers surveyed showed improved profitability in 2014.
CAPA said four of those that showed improved profits were Philippines-based carriers, namely, flag carrier Philippine Airlines, Cebu Pacific and its subsidiary Tigerair Philippines, and Philippines AirAsia.
“The Philippine market benefited from consolidation and capacity reductions while overcapacity plagued all the other major markets in Southeast Asia,” CAPA said in its report.
It said consolidation moves included the acquisition last year of Tigerair Philippines by Cebu Pacific in a $15-million deal. A year before, Philippines AirAsia, a unit of Malaysia’s Air Asia Berhad, acquired a stake in Zest Airways and later renamed the carrier Air Asia Zest.
“But by far the biggest improvement in the Philippine market and Southeast Asia overall has come at flag carrier Philippine Airlines. PAL, the last of Southeast Asia’s publicly listed airlines to report results for 2014, recently posted an operating profit of $7 million for 2014 compared to an operating loss of $283 million in 2013,” CAPA said.
Elsewhere in the region, the results were less rosy.
CAPA said five of those, Bangkok Airways, Malaysia AirAsia, Singapore Airlines and its regional subsidiary Silkair and Thai Air Asia saw a reduction in operating profits last year. Another four, Indonesia AirAsia, Malaysia Airlines, Tigerair Singapore and Thai Airways saw operating losses widen while another three Garuda Indonesia, Nok Air and Air Asia X swung from a profit to loss.
“Challenging market conditions and overcapacity have taken a huge toll on Southeast Asia’s airline sector. An overwhelming majority of the region’s airlines were unprofitable in 2014 across both the low-cost and full-service models,” CAPA said.
It sees better prospects for 2015, however.
“The outlook for 2015 is brighter. Market conditions began improving in [second half of 2014]. Most of the losses booked for 2014 were incurred in the first half of the year,” CAPA said.
“More capacity adjustments and consolidation may be needed for the Southeast Asian airline sector to return to the profit levels of a couple years ago. 2014 was an extremely challenging year. The sector has passed through the eye of the storm but some turbulence remains,” it added.