Singapore Air, Jetstar Cut Tokyo Services as Nuclear Crisis Dents Travel

Singapore Airlines Ltd. (SIA) and Jetstar, the budget unit of Qantas Airways Ltd. (QAN), cut Tokyo services as a nuclear crisis damps demand for flights to the Japanese capital.

Singapore Air, the world’s second-largest carrier by market value, will suspend one of its two daily services to Tokyo’s Haneda airport from March 27, it said on its website. Jetstar will redirect half of its 14 weekly Tokyo-bound flights to Osaka after a fall in demand, spokesman Simon Westaway said by phone.

Cathay Pacific Airways Ltd. (293), Korean Air Lines Co. and Singapore Air have also ended temporary capacity increases on Tokyo routes as demand cools. Carriers added seats out of the Japanese capital last week as overseas governments advised residents to avoid the city following an earthquake and an accident at a Fukushima nuclear power plant.

“Singapore Air’s capacity cuts show that it is taking concrete steps to match capacity to demand,” K. Ajith and Eugene Ng, analysts at UOB-Kay Hian Holdings Ltd., said in an e- mailed note today. “We expect other airlines to follow suit.”

The Singapore Air cut represents about 13 percent of the carrier’s Japan capacity, they said. The airline could eventually pare other routes including Tokyo’s Narita airport, Osaka, Nagoya and Fukuoka, they said.

Japan Air, ANA

Japan Airlines Corp., the nation’s flag carrier, has no plans to cut flights and has increased services to Tohoku, the region most affected by the earthquake, said Satoru Tanaka, a spokesman. Tokyo-based All Nippon Airways Co. also expects to maintain regular services, said Yoshifumi Miyake, a spokesman.

Japan accounts for 6.5 percent of global air traffic and 10 percent of sales, according to the International Air Transport Association.

Cathay Pacific, Hong Kong’s biggest carrier, flew the last of its extra evacuation flights on March 20 and it is now operating normally, spokeswoman Carolyn Leung said by e-mail.

Korean Air stopped adding extra flights yesterday, said Cho Hyong Chul, a spokesman. Asiana Airlines Inc., South Korea’s second-largest carrier, also has no immediate plans for more extra Tokyo flights, it said by e-mail. Both carriers will maintain regular services, which total seven flights a day each.

Malaysian Airline System Bhd. (MAS), which serves both Haneda and Narita, is seeing a decline in loads to about half-capacity on flights to Japan, it said by e-mail yesterday. China Airlines Ltd. (2610), Taiwan’s biggest carrier, last week only filled about 30 percent of seats on flights to Tokyo, compared with as much as 90 percent in the opposite direction, an airline official, who declined to be identified citing company policy, said yesterday.

Singapore Air Capacity

Singapore Air has returned to using its regular aircraft on Narita services after replacing them with larger planes through yesterday, spokesman Nicholas Ionides said by e-mail. Last week, the carrier postponed plans to introduce Airbus SAS A380s on Los Angeles flights via Narita airport. It will instead continue using smaller planes.

Qantas’s mainline unit is maintaining its daily services to Tokyo from Sydney and its three-times-a-week flights from Perth, spokesman Luke Enright said by phone today.

The travel slowdown may cause a 50 percent drop in Japan demand for Qantas and Jetstar, which could trigger a 30 percent reduction in capacity, JPMorgan Chase & Co. analysts including Scott Carroll said in a note today. The demand slump and the extra costs of flying Qantas services via Hong Kong for crew changes may cause a pretax earnings drop of about A$40 million ($40 million), they said.

About 70 percent of the Qantas group capacity between Australia and Japan is operated by Jetstar, with 25 services per week. The budget carrier usually serves both Tokyo and Osaka.

To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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