India-Pakistan conflict: Some Singapore businesses preparing for potential supply chain disruptions
Renewed tensions between India and Pakistan are raising fresh alarms over regional stability, with businesses in Singapore bracing for possible supply chain disruptions as the geopolitical situation unfolds.
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an hour ago
- CNA
Commentary: Record profits for SIA and other airlines, but aviation's long-term outlook isn't that rosy
SINGAPORE: From three years of losses during the pandemic to three consecutive years of record profits, Singapore Airlines (SIA) has made international headlines for the profit-sharing bonuses given to its employees, most recently 7.45 months' worth. SIA Group declared excellent financial results, with S$2.78 billion (US$2.14 billion) net profit for the fiscal year ended March 2025, boosted by a one-off S$1.1 billion gain from the divestment of stake in India-based Vistara. Emirates, a rival that is comparable in reputation to SIA, reported a record profit of US$5.77 billion People may have come to think of healthy profits as routine in aviation. But that hasn't typically been the case across the sector, according to management consultancy McKinsey. In fact, the airline industry's recent results and especially those reported by leading airlines such as SIA and Emirates have proven many analysts, including me, wrong. Most had anticipated airlines to struggle post-COVID once everyone scratched their revenge travel itch. Among the factors was that video conferencing adopted during the pandemic would persist to the point of reducing business travel, a key contributor to full-service airlines' profitability. That clearly hasn't happened. Also unanticipated were the robustness of the global economy post-pandemic and consumers' willingness to continue paying top prices amid concerns about cost of living and inflation. All these contributed to the increased yields (or the earnings for every available seat per kilometre travelled) enjoyed by carriers such as SIA compared to the pre-pandemic years. Customers are unlikely to find much respite from high fares in the short term. Demand simply outstrips supply. The International Air Transport Association expects the number of passengers to reach a record high of 4.99 billion in 2025, up 4 per cent from 2024. Airlines have faced difficulties in bringing planes that were mothballed during the pandemic back on stream constraining the supply of seats. Boeing and Airbus, which together control a large proportion of the commercial airliners made, have also told customers to expect delayed deliveries for new aircraft. They reported backlogs at the end of 2024 of over 5,500 and 8,600 aircraft respectively, considering between 600 and 800 were typically delivered each year. In particular, Boeing has had quality problems over the last few years, with the American planemaker's 2024 marked by a string of high-profile mishaps, legal challenges and the lowest number of deliveries (348) since the pandemic. AVIATION'S LONG-TERM PROSPECTS AREN'T THAT ROSY But at the risk of being wrong again, I would venture to say that air fares cannot keep going up. The long-term prospects of airlines are weaker than their short-term prospects. On the demand side, there are three reasons. First, there is a cloud of uncertainty hanging over the global economy, chiefly attributable to the prospect of a global trade war. Many economies in Asia will be dented by the imposition of United States tariffs (especially if the paused 'reciprocal' tariffs and more sector-specific tariffs come to pass), affecting the purchasing power of consumers in these countries. Equally importantly, if regional (or even within-country in the case of the US) supply chains substitute global supply chains, the multinational presence (especially of US multinationals) in Asian countries may decline, in turn impacting business travel to and from these countries. Second, employment in the tech sector – which has been a good paymaster for many people, especially the younger demographic – might struggle because of the emergence of AI and related technologies. Several recent reports suggest that layoffs by many tech companies are substantial, though it remains unclear whether these layoffs are because of the adoption of AI. Third, the recent uncertainty about the visa policies of the US might reduce the travel demand to and from the US, which will likely impact global travel demand. On the supply side, there are two reasons. New airlines may enter, especially if the yields earned by incumbent players continue to be firm. Markets with strong growth in the airline traffic such as India are already witnessing the entry of several smaller players who are not taking larger rivals head-on but competing with them regardless. As existing players aggressively add seats, yields might come down over time even if demand stays high. We are already seeing signs of this: In 2024, the US-based airlines reported record sales but not record profits. BUSTS AFTER BOOMS As always, the airline industry is also affected by uncontrollable factors such as jet fuel prices, pandemics and wars, among other things. The industry has often witnessed busts after booms, so going by past patterns, a bust may not be that far away. So, what is my advice to travellers? Maybe, for discretionary travel, they can pick and choose among destinations that offer better value while waiting for fares to moderate. For airline executives, my advice is to remain flexible by not taking on too much expansion, especially if it involves debt financing, squeezing out cost savings and strengthening their balance sheets. In other words, be ready to take advantage of the opportunities but protect your downside as well, if the environment becomes adverse.
CNA
7 hours ago
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Asia First - Tue 10 Jun 2025
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CNA
8 hours ago
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Singapore eyes start-ups from new markets to grow maritime ecosystem
Singapore is looking to attract maritime tech start-ups from markets like China, India and Germany to grow its maritime ecosystem. The launch of this year's PIER-71 Smart Port Challenge drew more than 200 budding firms and maritime players. The Maritime and Port Authority of Singapore will provide mentorship opportunities and funding for eligible proposals.
