SINGAPORE: SilkAir has revised its forecast for capacity growth downwards after natural disasters affected travel demand in some parts of the Asian region.

It is expecting capacity growth of between 5 and 7 per cent this year – down from its earlier forecast of between 8 and 10 per cent. This follows a strong performance last year when it posted an impressive 100 per cent surge in operating profits to S$40 million.

The carrier posted a net profit of S$10 million in the first quarter – up nearly 80 per cent over the same period last year.

Chin Yau Seng, chief executive of SilkAir, said: "SilkAir flies to a few destinations that have been affected by recent natural calamities. Yangon was affected by Cyclone Nargis in May and Sichuan province in China was also hit by the earthquake in May. That aside, over this Olympic period, we've also seen some softening of demand to China for various reasons."

Going forward, SilkAir expects robust demand for premium air travel to the region, especially to countries such as Malaysia, Thailand and Cambodia. The Singapore Airlines subsidiary also expects stronger growth in economy class passenger travel, which is why it has launched a new A320 with more economy seats and fewer business seats.

"In general, with a few exceptions, we've seen very strong demand and we continue to see very strong support from the travel trade, both in terms of leisure and business," said Chin.

SilkAir has 11 more A320 aircraft on firm order, with options for another nine. This will allow the carrier to spread its wings further in the region.

The airline also said fuel costs continue to be a challenge as fuel surcharges only help to recover half the cost of the increase in fuel charges.


- CNA/so