Shares of Singapore Airlines fell nearly 10% on Wednesday after the carrier warned that ticket prices were coming under pressure as costs are also rising, casting a shadow over Asia's biggest aviation gathering.
The airline's biggest one-day share price plunge since the global travel industry ground to a halt in March 2020 because of COVID-19 came after its December quarter earnings missed market expectations on Tuesday.
Singapore Airlines underscored broader aviation industry concerns about supply chain constraints and a more cautious outlook in Asia as China's international travel recovers from the pandemic at a slower pace than in much of the rest of the world.
As Airbus, Boeing and COMAC of China looked to seal aircraft purchase deals at the Singapore Airshow, the carrier said Tuesday that high fuel prices, inflationary pressures and supply chain constraints were presenting challenges to airlines globally.
"Passenger yields continue to come under pressure from increased competition as capacity restoration continues across the industry," the company added.
The carrier's net profit, while still strong, has fallen for two consecutive quarters after reaching a record in the June quarter last year, when it was buoyed by strong post-pandemic summer travel demand.
"Last year was pent-up demand, revenge travel," Mabel Kwan, a Singapore-based managing director at Alton Aviation Consultancy, said on the sidelines of the airshow.
"The results are looking past the pandemic recovery, fundamentals taking over a little bit, a little bit of tapering to normalization from that high growth that we had last year," she added.
The Singapore carrier's warning followed Air New Zealand's on Monday flagging weaker-than-expected results in the six months through June because of challenges from engine maintenance requirements, economic and inflation risks, early signs of softness in domestic demand and intense competition on U.S. routes.
U.S.-China flight capacity remains more than 75% below pre-pandemic levels this month, according to aviation data provider OAG, with services being restored slowly amid tensions between the governments.
In the meantime, U.S. carriers have sent more long-haul aircraft to Australia and New Zealand, pressuring fares in those markets.
Other challenges for airlines include the need to ground some planes for engine inspections to check for potentially flawed components.
Philippine low-cost carrier Cebu Pacific has 10 Airbus A320neo family planes out of service as workers check RTX subsidiary Pratt & Whitney's GTF engines, its chief executive Michael Szucs said on the sidelines of the air show.
Air New Zealand, which also uses the engines, said the inspections would cost it NZ$35 million ($21.64 million) in the current half, including the cost of short-term leased aircraft and adding contact center resources for affected customers.