Asian airlines fill seats but profits still grounded

Passengers have returned to Asia’s SARS-buffeted airlines but free tickets and heavy discounts are putting pressure on already paltry bottom-lines. To lure back customers, Thai Airways International and Cathay Pacific Airways Ltd have given away 30,000 free tickets. Hong Kong’s number-two carrier, Dragonair, has sold round-trip tickets to Beijing for as little as HK$800 ($103), a fraction of the regular price of HK$4,800. Such giveaway fares have fuelled a quicker-than-expected recovery in traffic but this has come at a price. ‘‘The risk this year is that airlines become less profitable than they would have been if they’d just held the line on pricing and fewer people travelled,’’ said Timothy Ross, an analyst at investment house UBS.

A key test for the industry will come in northern autumn when most carriers have said they will restore their full schedules and halt hefty discounts.

‘‘You will have a bizarre situation of more capacity being flown, and ticket prices going up,’’ said Ross. ‘‘If the market is still very weak then we are going to end up with a heck of a lot of empty seats.’’

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Hong Kong-based Cathay, which lost $3 million a day at the peak of the SARS outbreak, said it was not yet breaking even in early July despite carrying 88 per cent more passengers in June than May.

Singapore Airlines Ltd expects a loss in the first quarter to June, and has sacked nearly 600 staff to cut costs. ‘‘Passenger loads are seeing an improvement,’’ said PhilipChen, Cathay’s CEO. (Reuters)