Business

Singapore Air, Tiger to benefit from Qantas woes, say analysts

October 31, 2011

SINGAPORE, Oct 31 — Singapore Airlines Ltd (SIA) and budget carrier affiliate Tiger Airways Holdings are likely to increase its market share at the expense of Qantas Airways Ltd which is locked in a fight with labour unions, analysts said today.

They said the dispute, which resulted in the Australian flag carrier grounding all its aircraft over the weekend before resuming service today, affecting nearly 70,000 passengers, will hurt the Qantas brandname and drive passengers to other carriers, with SIA among the main beneficiaries.

Qantas competes with SIA on routes linking Australia’s major cities and Singapore, and from the Southeast Asian city-state to various European cities such as London and Frankfurt. Singapore-based Tiger also operates domestic flights in Australia.

“Three of the top four routes out of Australia in terms of passenger numbers are actually the Australia to Singapore routes,” Andrew Orchard, a regional airlines analyst at RBS, told Reuters.

“SIA also has the second-largest market share currently out of Australia, behind Qantas,” he added.

As for Tiger, RBS analyst John Rachmat said Qantas’ decision to ground its planes will “accelerate the process whereby Tiger Australia will be allowed to resume its normal level of operations”.

Tiger, whose Australian operations were suspended earlier this year because of safety issues, currently flies 22 sectors a day, down from 66 sectors a day before the suspension.

SIA shares rose as much as 1.6 per cent earlier on Monday before declining with the rest of the Singapore stock market, while Tiger climbed as much as 4.6 per cent.

UBS said the problems at Qantas will lead to disgrunted Qantas customers to opt for other airlines, particularly during the upcoming holiday season.

“The suspension created minor traffic diversions to other Asian carriers. What is more important, in our view, is that the disputes may affect travellers’ choices on their upcoming holiday travel,” UBS said.

“Cutting off the nose to spit your face is no way to run a business,” said Jonathan Tan, a senior lecturer at the Australian Catholic University School of Theology. — Reuters  

 

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