Business Times - 22 Apr 2010
Counting post-eruption losses
By VEN SREENIVASAN
AS FLIGHTS are gradually restored to Europe, global carriers will be starting to dust themselves
down to see just how badly they have been hit.
Singapore Airlines estimates it lost some $40 million in revenue from flight cancellations and
disruptions, comprising $10 million from cargo operations and $30 million from passenger
operations. The airline also estimates having coughed up some $10 million on the cost of hotel
accommodation, meals and other facilitation to cater for affected customers in Singapore and at
Analysts are trying to translate this into bottomline numbers, with estimates now in the $20 million
SIA operates up to 25 flights a day to Europe. And this route has been recently enjoying load
factors of some 84 per cent, well above the system-wide average. Europe is estimated to account
for about 10 to 15 per cent of the airline's revenue.
More importantly, the Asia-Europe services enjoy strong demand for premium seats. And premium
seats are estimated to account for 40 per cent of the airline's income.
While the company itself does not provide breakdown of economy and premium seat loads by
sectors, anecdotal evidence suggests it enjoys close to 90 per cent occupancy on its northern
European sectors. And this segment was worst hit by the eruptions of Eyjafjallajokull.
With normal flights schedules kicking in yesterday evening, SIA and its peers seem to have scraped
through what could have been a major financial catastrophe for an industry which is just recovering
from its worst year in history.
The International Air Transport Association (Iata) estimates that the Icelandic volcano crisis cost
airlines more than US$1.7 billion in lost revenue through Tuesday - six days after the initial eruption.
For a three-day period (April 17-19), when disruptions were greatest, lost revenues are estimated
to have reached US$400 million per day.
Though much of the focus has been on European carriers, the Asso