(CNN Philippines) — Last year was not a good one for the Southeast Asian airline sector, according to aviation think tank CAPA – Centre for Aviation.
In a report released Tuesday (April 21), CAPA said that challenging market conditions and overcapacity have taken a huge toll on Southeast Asian aircraft groups. In 2013, it reported that such airlines generated a $145 million operating profit when grouped as a whole. This figure stands in stark contrast to that of 2014 — the group registered a $916 million operating loss.
Of the 18 companies studied by the organization, five registered a reduction in profits, another four saw their operating profits reduced, and three plunged from a profit to a loss.
However, CAPA said that the Philippines was an exception to the somber trend. Four of the six airlines that generated improves profits last year are based in the country — Philippine Airlines (PAL), Cebu Pacific, 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.”
The think tank specifically points out PAL’s turnaround. From a P283 million loss in 2013, the airline registered a P7 million profit last year.
CAPA believes that this year will be a better year for the industry, because of improved market conditions that began during the second half of 2014.
“As most airlines emerge from more expensive fuel hedges, the impact of substantially lower fuel costs will feed through and should deliver a much needed boost to the bottom lines of many airlines. The only caveat here is whether the positive revenue impact will be offset by discounting and a new round of capacity expansion.”
