Clear skies ahead: Aviation sector to fully recover by FY25
The lifting of most travel restrictions will drive the sector to recovery, according to experts.
The skies are finally clearing for Singapore’s aviation sector following the country’s lifting of most of its restrictions on international travel.
Based on consensus, UOB Kay Hian said the Singapore aviation sector is likely to fully recover by FY25.
Whilst the easing of travel rules is expected to increase passenger volume, the recovery in this area will be slower than that of flight activities, according to UOB Kay Hian.
“As such, the revenue of businesses directly geared to flight activities, including SIAEC’s line maintenance services (about 50% of its pre-COVID-19 revenue) and SATS’ ground handling services (30%) should recover faster than revenue of businesses linked to relatively lagged passenger volume, such as SIA’s passenger flown revenue (80%) and SATS’ infight catering revenue (40%),” the analyst added.
Given the faster recovery of flight activities, the analyst also expects SIAEC and SAT to resume dividend payment in FY23 “when the two would have returned to positive core net profits.”
On the brighter side, the easing of travel restrictions will still help the aviation sector and Singapore move close to its goal to restore the passenger volume at Changi Airport to at least 50% of the pre-COVID-19 level in 2022.
Globally, the International Air Transport Association forecast air travel passenger volume to recover to 103% of the pre-COVID-19 level by 2024, whilst APAC will be at 97%.