Outlook seen dim for carriers until Q3

The outlook for the aviation industry has dimmed as international arrivals are expected to remain muted until the third quarter, with a significant slowdown from China the main culprit, say analysts.

- NAREERAT WIRIYAPONG

Sweeping US tariffs are likely to pose operational challenges for airlines, affecting both top-line revenue and operating costs amid decelerating travel demand growth in Asia, noted leading brokerages.

Boonyakorn Amornsank, an analyst with Maybank Securities, said airlines operating China-Thailand routes continue to cut capacity as demand weakens.

Asia Aviation (AAV), the domestic leader with a market share of nearly 40%, will be affected the most as it faces domestic competition after rotating capacity away from China.

Other carriers have also been cutting seat capacity on China routes and rotating their aircraft to serve more domestic routes, where competition was previously limited, said Mr Boonyakorn. AAV is likely to reduce its average airfare to maintain its load factor, he said.

Historically, seat capacity rotation in the industry has led to a sharp decline in average airfares.