Singapore and Cathay airlines hit by rise of Chinese carriers

For decades, the two were rivals: Singapore Airlines and Cathay Pacific cornered the market in long-haul business travel, connecting Asia to the rest of the world. Now both face headwinds from a similar direction. Cathay Pacific announced 600 job cuts at headquarters this week after months of turbulence that saw the Hong Kong carrier’s first annual loss for eight years and the departure of its chief executive. The rise of Chinese carriers has buffeted both of Asia’s marquee airlines at a time when they were already under pressure from Gulf airlines and low-cost alternatives.  Declining financing costs for new jets have encouraged airlines to add capacity. Analysts say weak passenger yields — a measure of the fare paid per kilometre travelled — are likely to persist as Chinese rivals expand aggressively.  Low fuel prices will intensify competition, encouraging rival airlines to cut fares in an already highly competitive Asian market.  “Overall, the airline industry is suffering from oversupply,” said Corrine Png, who runs independent equity research house Crucial Perspective.  “Traffic is growing but capacity is growing in excess of it. Airlines such as Singapore Airlines have had to discount [fares] to fill up the planes.” The broader narrative behind both airlines’ troubles is the shift away from reliance on Singapore and Hong Kong as connectors for outbound Asian travel.  Both airlines played an important role in their cities’ transformation from gritty, commercial centres into unlikely tourist destinations. But now, rather than stop over in Singapore on their way to Sydney, mainland Chinese tourists are flying directly to Australia on their domestic carriers. <br/>