SIA must roll out steep fare cuts after fiery flight mishap: analysts

The incident will hurt customer sentiment, take-up rates.

Singapore Airlines (SIA) may have to slash its published fares to preserve loads, as a recent mishap with one of its flights may weigh down customers’ sentiment.

According to a report by Maybank Kim Eng, SIA’s near miss with Flight SQ368’s engine malfunction might lead to a “small crisis.”

As many have booked their holiday way in advance, SIA’s load factor is unlikely to see meaningful reductions in July to August. The same cannot be said for after this period, though.

“Given the very graphic pictures of flames engulfing the aircraft wing, this will invoke memories of the incidents that gloomed Malaysia and Indonesia back in 2014. The customers’ sentiment will be negative and this may lead to lower take-up rates in the next 2-4 months and impact yields,” Maybank Kim Eng asserts.

“The reality is consumers have unending choices and the fares are rather cheap nowadays. We believe SIA must provide deep fare discounts to mitigate this small crisis,” it adds.

Photo: IanC66/Shutterstock.com

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