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SINGAPORE : Premium flag carriers like Singapore Airlines (SIA) and Hong Kong's Cathay Pacific could see improved earnings in the second quarter, thanks to the return of regional business class travellers.
Low cost carriers are also expected to do well on the back of the strong economic recovery in Asia, spurring passenger numbers within the region.
Business class load factors fell as low as 20 to 30 per cent during the downturn two years ago, but have climbed back up for flag carriers like SIA and Cathay Pacific.
Observers said this is on the back of increased business activity in Asia as economic growth picks up.
Shukor Yusof, supervisory analyst, Aviation, Standard & Poor's Equity Research, said: "There are obvious reasons for this, as Singapore and Hong Kong are key financial hubs in this part of the world.
"So we're seeing a tremendous pick up in terms of load factors for business seats, easily over 70-75 per cent for both two carriers."
Carriers across the region have also seen a rise in passenger numbers to North American and European destinations on stronger Asian currencies.
Observers said this is expected to translate to a 5 to 10 per cent rise in ticket prices towards the end of the year.
Low cost carriers may also do well in the second quarter, with players like Jetstar, AirAsia and Tiger Airways riding the tourism growth as the economy recovers.
This may result in passenger growth of 10 to 15 per cent on-year for the budget players.
Analysts also said budget carriers have been outperforming their full service counterparts in terms of innovative offerings.
Mr Shukor said: "In terms of fare discounts, in terms of introducing new destinations... - the advantages to the consumer are many, in terms of having the options to fly whenever you want to fly, with the fares to match."
Observers added that going into the rest of the year and 2011, the biggest risk facing airlines remains the slow US economic recovery and the European debt crisis.
As a result, it is the second tier full service carriers that have the most to lose, as they lack the cash reserves of the premium carriers and the flexibility of budget players.
- CNA/al
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