SIA's lacklustre August traffic, yields signal waning demand

Pax traffic's 6.8% tumble is a four year low.

Singapore Airlines' (SIA) uninspiring August figures are hinting at slowing demand, as traffic and yields sank to record lows.

According to a report by UOB Kay Hian, the 6.8% pullback in pax traffic and 5.5% slide in pax carriage reveal the weakest August figures for SIA in four years.

Regional full service carrier SilkAir's traffic also dipped 2% YoY, which suggests a broad-based slump in demand.

UOB Kay Hian noted that demand was hurt by concerns over the Zika virus, as infections only made headlines on 28 August. At this stage, however, it remains unclear what weighed down demand.

"The steep decline in traffic and yields seem to suggest weakening demand dynamics, which could be due to: a) increased competition out of Singapore, b) demand destruction from a weaker economic environment, and c) substantial capacity additions by Chinese carriers towards Australia which would thus impact Singapore’s transit/transfer traffic," UOB Kay Hian stated. 

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