SE Asian airlines: end is near for some, while others fly on

South East Asia is a complex aviation environment. None of the countries in the region are integrated economically or in any sense in the aviation market, despite relative ease of travel between them. In order to operate in one country and fly to the others, every airline in the short haul market has to have a separate subsidiary in every other country, often with aircraft registered in that country, for them to operate international short-mid-haul flights. It’s a complicated and expensive business.

Big Airlines like Air Asia Group have been facing grindingly bad conditions that have seen them hover close to extinction. Many of their subsidiaries have been shut down permanently. They cling desperately to what little cash they generate, hoping above hope they can get through this into next year.

The airline most in danger is Malaysian. Reports surfaced yesterday that the state investment company Kazanah Nascional, has decided it will stop supporting the airline at the end of December and only put money into the regional carrier, Firefly. If it does, that’s almost certainly the end of Malaysia Airlines, it doesn’t seem to have any other means of sustaining itself.

Firefly will operate from March 2021, initially with 10 737-800’s that will be taken from Malaysia Airlines fleet. They will join 12 ATR72-500’s all flying out of Penang.

In Vietnam, typhoons and Covid conspired to add more woe from July onwards to the aviation sector. The Vietnamese Government has blocked new airline startups until Covid is basically vaccinated away.

In Thailand, Thai Airways is in bankruptcy protection and as good as moribund. It won’t go out of business, the government would never allow it, but it isn’t being bailed out either. It’s basically scraping by using everything from themed restaurants and shopping offers, to raise money while its bankruptcy reorganisation progresses. That won’t be reviewed until March 2021. The courts will almost certainly allow its survival, but it will be smaller and face some stark operational decisions – the fate of its A380’s will be high on the list.

Singapore Airlines is establishing a set of Covid-free bridges with Australia, New Zealand and Hong Kong, in an effort to restart some services, and its already restarted its London operation (though passenger numbers are minimal and its mostly cargo), and its direct non-stop to JFK, again is mostly cargo. The airline has continued to refurbish its older A380’s and it has raised another $1.3 billion in capital over the past few weeks.

Singapore Airlines looks very much like it will be first out of the gate and the most likely to bounce back once travel resumes. Somehow I don’t think anyone is really surprised by that, it’s always been one of the best run airlines in the world.

It’s not strictly SE Asia, but Cathay Pacific has been facing some dire problems in Hong Kong. The politics of Chinese Communist oppression has finally come home to roost as democracy is literally snuffed out one light at a time, leaving staff feeling vulnerable, and highly targeted. The company is basically under the microscope through communist party supporter implants in the boardroom, and its overall economic situation has proved dire.

Between Covid and the crushing of democratic dissent 2019-20 has been tumultuous for the ailrine. Cathay Dragon is being closed down as a brand and Cathay Pacific has taken up short haul operations for the future.

It’s one light has been the cargo sector and its decision to fly into Pittsburgh, Pennsylvania as part of its longer term goals of establishing a wider network. If the 12 week posting works well, it’s likely to be continued. Cargo has saved the airline – and many others from a very likely complete collapse.