Qatar Airways’ aggressively cheap fares are chasing SIA out of the lucrative European market

Load factors to Europe fell for 3 straight months.

Singapore Airlines is bearing the brunt of Qatar Airways’ aggressive capacity expansion in the region, a report by UOB Kay Hian revealed.

SIA’s operating statistics June operating statistics showed that overall passenger load factor slipped by 1.6 points last month. PLF to Europe showed the largest contraction with a decline of 4.5 points.

SIA attributed the decline to weak demand and intensifying competitive pressures. According to UOB Kay Hian, Qatar Airways’ additional capacity out of Singapore and its aggressively cheap fares may be a key reason behind SIA’s weak statistics.

“June’s weak loads to Europe suggest that Qatar’s capacity increase could be a reason for the drop in loads to the region, although Greece’s problems could also have contributed to the drop. Europe is a key market for SIA, accounting for 28% of SIA’s (parent airline) capacity and is also a key market for business travel,” said the report.

Qatar Airways rolled out its new Airbus A350 aircraft in May, part of a slew of measures to increase market share in Singapore.

“Qatar Airways likely gunning for a share of the business class segment. Current promotional fares to five European cities are at least 30% cheaper than that of SIA. Qatar Airway’s ultimate goal appears to be a slice of SIA’s high-yielding business class as the increased capacity will add additional 448 weekly business class seats to Europe, via Doha. We estimate that the increase in business class capacity will approximate 11-14% of SIA’s business class capacity to Europe,” the report noted.

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