Skift Take

Even as the airline industry goes through a boom in the region flyers are turning to the budget operators for their flights instead of older established players like Qantas and Singapore Airlines.

Source: Bloomberg
Author: Sharon Chen

Asia-Pacific budget airlines AirAsia Bhd. and Qantas Airways Ltd.’s Jetstar overtook full-service carriers in a brand-reputation survey as more passengers in the region turned to cheaper options amid a global economic slowdown.

Singapore Airlines Ltd. and Cathay Pacific Airways Ltd., among the world’s 10 biggest carriers by market value, were ranked below the two low-cost air-travel operators, according to the report compiled by Nielsen Holdings NV and Campaign Asia- Pacific, a marketing industry magazine.

Global airline profits are set to fall in 2012 by more than half to $3 billion from $7.9 billion last year, according to the International Air Transport Association, as recessions in the U.K., Spain and other European countries damp demand and erode gains from lower fuel prices.

“It’s an economic reality,” Therese Glennon, managing director of consumer insights for Asia Pacific, Middle East and Africa at Nielsen, said in an interview yesterday. “As the demand for budget travel increases, as the economic situation deteriorates, you see a lot of these bigger airlines adjusting their business models.”

Nielsen asked 400 respondents in each of 12 Asia-Pacific countries where it conducted the survey to name the top two brands they thought were most trusted or had the best reputation in 14 categories, including travel and leisure, it said.

Shares rise

AirAsia shares rose 0.3 percent to 3.71 ringgit as of 2:53 p.m. in Kuala Lumpur, set for the highest close in almost five months. Qantas climbed 0.9 percent to A$1.11 in Sydney.

Cathay in May predicted “disappointing” first-half earnings. The company has pared passenger-capacity growth, cut flights to North America and Europe this year, imposed a hiring freeze on ground staff and offered cabin crew unpaid leave.

“While we cannot comment on the validity of this specific survey, being unaware of its exact methodology, we can share that for more than 65 years, Cathay Pacific has been serving travelers from around the world,” the airline said in an e-mailed response to questions.

Singapore Air, which posted an unexpected fourth-quarter loss of S$38.2 million ($30 million), started a low-cost carrier that completed its first flight last month. Nicholas Ionides, a spokesman for Singapore Air, declined to comment because he hasn’t seen the report.

Other full-service airlines that were ranked lower include Qantas, Australia’s largest carrier that forecast last month annual profit may fall as much as 91 percent, and Korean Air Lines Co., South Korea’s biggest flier that slumped to a surprise first-quarter loss.

Samsung Electronics Co., Apple Inc. and Sony Corp. were the top three brands in the survey.

With assistance from Jasmine Wang in Hong Kong. Editor: Christian Schmollinger, Linus Chua. To contact the reporter on this story: Sharon Chen in Singapore at [email protected]. To contact the editor responsible for this story: Linus Chua at [email protected].

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Tags: airasia, jetstar

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