SIA may tighten budget on passenger giveaways as fuel cost surges.
According to Bloomberg, the on-board giveaways, famously rolled out to every passenger in the 1970s by Singapore Airlines Ltd., will be unsustainable for some carriers after OPEC’s production cuts announced last week drive up the cost of fuel. Quoting aviation analyst, the report said other options would include cutting unprofitable routes, retiring gas-guzzling aircraft and raising fares. Patricularly vulnerable to such rising fuel costs are Asian operators as their profit margins are about half those of their North American peers after competition pushed down fares.
"In order to survive, some Asian airlines may be forced to ape U.S. low-cost carriers and charge for extras -- ranging from food and alcohol to checked-in baggage -- that have been taken for granted on long-haul flights for decades, according to Mathieu De Marchi, a Bangkok-based aviation consultant at Landrum & Brown," the report said.
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