- The International Air Transport Association (IATA) recently announced that passenger traffic demand remained robust in April. Total traffic (measured in revenue passenger kilometres (RPK)) rose 45.8% versus April 2022. Globally, air traffic is at 90.5% of pre-COVID levels, led by domestic traffic which has surpassed April 2019 levels by 2.9%.
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- In the near term, further travel demand recovery is likely to be supported by the peak travel season in the Northern hemisphere, as well as a more meaningful recovery in outbound travel from China in the second half of 2023.
- As easing inflation and declining jet fuel prices moderate cost pressures, strong air traffic demand may sustain for a longer period of time, presenting further upside potential for airlines.
SIA’s brand promise remains in-tact
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- SIA also announced that it will be providing free unlimited in-flight Wi-Fi to KrisFlyer members flying in economy and premium economy classes from 1 Jul 2023.
- We think that SIA’s responsiveness underscores its commitment to service excellence, and is a long-term positive for its brand image. This could prove to be a powerful asset and lend SIA greater competitiveness and resilience in defending its market share when demand and prices begin to normalise.
- Separately, we also look favourably on SIA’s planned joint venture with Garuda Indonesia, which will expand SIA’s network connectivity, in line with its longer-term strategy.
Risk-reward profile has become more balanced
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