Soaring oil prices deal heavy blow to aviation industry; SIA Group profit drops 62%

By Liu Jiawen, compiled and reported

Singapore Airlines Group released its financial report for the first half of the 2011 fiscal year, showing a net profit attributable to shareholders of S$239 million (approximately NT$5.6165 billion), a 62% decrease compared to the same period last year, primarily due to a significant 45% surge in fuel prices from the previous year, leading to a S$747 million increase in fuel expenditure. Operating earnings also fell to S$134 million (approximately NT$3.149 billion), a S$462 million decline compared to the same period last year.

In the first half of this year, SIA carried a total of 8.5 million passengers, a 3.3% increase from the same period last year. Passenger growth slightly lagged behind capacity expansion, resulting in a 1.9 percentage point drop in passenger load factor to 77.5%. Scoot increased its capacity by 9.4% in the first half, which was matched by an equivalent rise in passenger volume, keeping its passenger load factor steady at 74.2%, while its overall break-even load factor also rose slightly by 1.8%. In the cargo segment, SIA Cargo’s freight volume increased by 2.0% compared to the same period last year, with the average cargo load factor rising marginally by 0.1%.

In terms of route development, SIA increased capacity in growth markets such as Hong Kong, Guangzhou, Taipei, Mumbai, and Jakarta, while reducing capacity on direct flights to and from Los Angeles. Scoot launched services to Kolkata, complementing SIA’s existing flights to the city, and also began flights to Koh Samui.

Due to ongoing global economic uncertainty and weak consumer confidence, demand for air transport—both passenger and cargo—has been affected, reflecting a downturn. Coupled with recent pressure from a stronger U.S. dollar, the impact of high fuel costs has intensified. At present, SIA Group maintains a robust balance sheet and will continue to monitor and appropriately respond to shifts in business trends, while maintaining strict cost control measures.