Singapore Airlines said Wednesday (15 April) that its passenger traffic in March fell 60.4 percent (measured in revenue passenger-kilometres) because of the virtual halt in global air traffic as a result of the COVID-19 coronavirus pandemic that has killed more than 100,000 people and infected almost 2 million people across the globe.
Singapore’s flag carrier said capacity cuts in March resulted in an overall reduction of 43.8 percent (measured in available seat kilometres) during the month, leading to a 24.1 percentage point reduction in passenger load factor (PLF) to 57.4 percent. The airline said passenger carriage declined by 57.2 percent compared to a year before, against a 37.8 percent cut in capacity. Consequently, PLF decreased by 25.3 percentage points to 55.7 percent and fell across all route regions, with North Asia especially affected. SilkAir’s passenger carriage decreased by 71.1 percent against a 58.5 percent cut in capacity. This led to a 23 percentage point decline in PLF to 52.4 percent. Scoot’s passenger carriage declined 68.3 percent against a contraction in capacity of 61 percent, which led to a 16.0 percentage point decrease in PLF to 69.5 percent.
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Cargo load factor (CLF) was 5.7 percentage points higher as the capacity contraction of 34.7 percent outpaced the 28.8 percent decline in cargo traffic (measured in freight tonne-kilometres). The East Asia, Americas and Southwest Pacific regions registered improvements in CLF.
“In the fourth quarter of the financial year 2019-20, the SIA group confronted the greatest challenge in its history due to the global COVID-19 outbreak, which had an unprecedented impact on its business. Since February 2020, the group has progressively announced flight cuts across its network as it adjusted capacity to match falling demand for air travel,” the company said in a statement announcing the results.
The company said “market conditions deteriorated rapidly in March” as the virus spread and as border controls and travel restrictions became widespread across the globe. From 24 March all short-term visitors were not allowed to enter or transit through Singapore.
The airline said capacity was “further rationalised in response. By the end of March 2020, SIA had announced a 96 percent cut in SIA and SilkAir’s combined capacity, while Scoot had also suspended 98 percent of its network, in both cases compared to their original schedules to end April 2020. Out of the SIA Group’s fleet of approximately 200 aircraft, only about 10 were in operation to serve a limited passenger network”.
The company said it may need to extend capacity cuts if border controls and travel restrictions remain in place and travel demand continues to fall from its already desperate levels.
SIA said its cargo operations had been holding up but the reduction in belly-hold cargo on passenger planes that are not flying impacted operations, “significantly” reducing the airlines overall cargo capacity. “As a result, SIA has also been selectively deploying passenger aircraft on cargo-only flights to meet the demand from global supply chains,” the company said.
“The collapse in passenger traffic has had a severe impact on the SIA Group’s revenues,” SIA said in its statement, adding that “while the capacity cuts and other cost-management measures that SIA has implemented have helped to reduce expenditures, many costs are unavoidable regardless of the number of flights mounted. That means these measures will not fully offset the contraction in passenger revenue.”
SIA is also over-hedged on its fuel purchases and surplus hedges will need to be marked to market by 31 March 2020, a date on which the Brent oil price was close to its 10-year low, and are expected to generate substantial losses.