AirAsia and its long-haul unit have been Asia’s worst-performing airline stocks this year after a series of crashes in 2014
Bloomberg
Singapore
Asian airlines improved their safety records in 2015, but - outside of China and India - you wouldn’t know it from looking at their stock performance.
AirAsia and its long-haul unit have been Asia’s worst- performing airline stocks this year after a series of crashes in 2014, including one involving AirAsia’s Indonesian affiliate, raised concerns about aviation safety across the region.
Fatal accidents involving Malaysia Airlines, AirAsia Indonesia and Taiwan’s Transasia Airways Corp made 2014 a deadly one for travellers. The accidents, in which a total of more than 700 people were killed or presumed dead, highlighted shortfalls in aviation infrastructure and practices in some parts of Asia.
This year, more than 100 people have died in plane crashes around Asia.
AirAsia has fallen 53% this year and AirAsia X has dropped 65%, according to data compiled by Bloomberg on 39 Asian carriers.
The Bloomberg Asia Pacific Airlines Index, a gauge of 15 major Asian airline stocks by market value that doesn’t include the AirAsia companies, has gained 21%.
“The accidents have left a lasting impact for a lot of global travellers and also domestic travellers.
They just feel nervous,” said Mohshin Aziz, an analyst at Malayan Banking Bhd in Kuala Lumpur. “The perception lingers.”
In contrast, surging travel demand has made Chinese and Indian airline shares some of the world’s best performers. Spring Airlines Co is up nearly 600% since it began trading in Shanghai in January, while Juneyao Airlines Co has jumped more than fivefold since its debut in May. India’s SpiceJet has climbed almost 300% this year.
Almost 36mn Chinese travelled overseas in the third quarter, 12% more than a year earlier, according to the Chinese Outbound Tourism Research Institute, which forecasts 135mn outbound Chinese tourists for the full year. IGATE Research, in a report cited on the Financial Express website, predicted India would have almost 30mn outbound tourists by 2018. India and China are among the fastest-growing markets for Airbus Group SE and Boeing Co, which both expect Asia to overtake the US as the world’s biggest plane market in two decades.
Elsewhere in Asia, though, even carriers with good safety records have suffered, with Thai Airways International shares dropping 43% this year and Bangkok-based budget carrier Nok Airlines down 50%. The UN’ International Civil Aviation Organization cut Thailand’s safety rating earlier this year and the US Federal Aviation Administration followed suit December 1, barring Thai carriers from adding US destinations.
The European Union ultimately didn’t downgrade Thai airlines in its semi-annual safety list issued December 10, but its inspections left Thai regulators scrambling to improve aviation safety.
Another legacy carrier suffering from the general perception of risk is Indonesia’s PT Garuda Indonesia, down 42% this year. Still, it could be worse: Russia’s Transaero Airlines, for example, was down 95% through December 18, data compiled by Bloomberg show.
