Outlook
Global passenger traffic grew, with industry-wide RPK up 0.2% YoY (up 1.2% ex-Middle East).
The growth was affected by renewed US-Iran tensions. Singapore jet fuel climbed back above
US$160/bbl by early September, and crack spreads widened from around US$35/bbl to over
US$60/bbl. Given that jet fuel is priced predominantly in USD, while airlines earn most of their
revenue in local currencies, exchange-rate movements have led to differing market impacts.
In Brazil and Mexico, currency appreciation helped limit the rise in local-currency fuel prices
to around 86%. In Japan, a weaker yen compounded the shock, pushing the increase as high
as 173%. China stands out as a notable exception: despite a stronger renminbi, above-average
regional fuel price increases still drove its local-currency fuel costs up 132%.
Air cargo rates are expected to normalise as airlines restore capacity. Air cargo rates
previously rose due to maritime shipping disruptions, higher jet fuel prices, and constrained
airline capacity. Middle East carriers, whose networks account for around 80% of India-to
Europe capacity and 25-30% of China and Southeast Asia-to-Europe capacity, saw significant
disruption during the conflict, which in turn benefited Singapore Airlines through its presence
on Southeast Asia-to-Europe routes that experienced sharp yield increases.
Moreover, the EU’s removal of de minimis exemptions remains a drag on cargo volumes.
Hong Kong-to-Europe volumes are down c. 35% YoY, while China-to-Europe volumes are
down 5% to 8% YoY. APAC-to-US volumes have, however, grown at double digits, driven by
AI-related demand. Middle East and Gulf capacity also remains well below pre-war levels,
with Gulf capacity still around 17% below its pre-conflict baseline. Export volumes from the
Middle East and South Asia continue to grow YoY, indicating resilient underlying demand.
Pricing has stayed sticky despite volume swings, with global blended rates holding in the
$2.95/kg to $2.97/kg range.
As of 2Q26, combined Boeing and Airbus backlog reached 16,038 aircraft (up 6% YoY). SIA
Engineering’s largest customer, Singapore Airlines, saw total fleet growth decelerate through
to FY25 before accelerating in FY26. Average fleet age has climbed steadily YoY, reaching 7
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SINGAPORE AIR TRANSPORT MONTHLY UPDATE
years 9 months as of FY26. SIA has been successfully working through its order pipeline and
receiving aircraft, even as the broader OEM backlog remains a structural, industry-wide issue.
The 777-300ER (15Y 11m) and the 747-400F (22Y 4m) fleets are currently the oldest passenger
and freighter aircraft in SIA’s fleet respectively, and are likely to require the most heavy checks
and maintenance work going forward.
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Hashim graduated from the National University of Singapore with a degree in Business Administration.
