Singapore Airlines (SIA), one of Asia’s premier aviation companies, has reported a dramatic decline in its net profit for the second quarter of the 2025 financial year. The airline posted an 82 percent drop in net profit compared to the same period last year.
The significant downturn in profitability has raised concerns among investors and analysts alike, as the global aviation industry continues to face challenges in the post-pandemic recovery phase.
While multiple factors have contributed to the loss, one major competitor, Air India, has been singled out as a key factor behind this decline.
Rising Operational Costs and Intense Competition
SIA’s financial troubles come at a time when the airline industry is still grappling with the aftereffects of the COVID-19 pandemic. Although the sector is recovering, the recovery has been uneven, with some airlines experiencing a faster bounce-back than others. For Singapore Airlines, rising operational costs, particularly the cost of aircraft procurement and maintenance, have put significant pressure on its profit margins.
Additionally, the airline faces fierce competition from other international carriers, particularly in the Asia-Pacific region. Air India, which has seen substantial growth in recent years, is increasingly becoming a direct rival to Singapore Airlines in key international markets. The expansion of Air India’s long-haul network and its competitive pricing strategies have led to an intensification of rivalry, making it difficult for Singapore Airlines to maintain its dominant market share.
Air India’s Growing Influence in the Market
In recent years, Air India has undergone significant transformation, especially after being acquired by the Tata Group. The national carrier of India has received a major overhaul in terms of its fleet, services, and route network. Under Tata’s management, Air India has focused on expanding its global presence, aggressively pursuing international routes that were once dominated by Singapore Airlines. Air India’s increasing focus on high-demand destinations in Europe, the Middle East, and North America has directly affected Singapore Airlines’ operations.
The airline’s competitive pricing strategy has also made it a more attractive option for budget-conscious travelers, who may have previously favored Singapore Airlines for its premium service offerings. As a result, Air India has been able to carve out a larger share of the market, particularly on long-haul international routes, which has directly impacted SIA’s bottom line.
Fuel Costs and Operational Strain
The sharp rise in global fuel prices is another major factor contributing to Singapore Airlines’ declining profits. Like many other airlines, SIA has been hit by the skyrocketing cost of aviation fuel, which accounts for a significant portion of operational expenses. Although the airline has taken measures to hedge against fuel price volatility, the cost pressure remains substantial, further eroding profit margins.
Additionally, as travel demand continues to fluctuate, airlines are under pressure to balance capacity and operational efficiency. For Singapore Airlines, this means maintaining a large fleet of aircraft while ensuring that its premium services remain attractive to high-paying customers. However, with increased competition from lower-cost carriers, such as Air India, maintaining this delicate balance has become increasingly difficult.
Air India’s Expansion Plan
Air India’s strategy has been aggressive and aimed at quickly scaling its operations. The carrier is adding more aircraft to its fleet, modernizing its services, and increasing its presence in key international markets. This rapid expansion has been a direct challenge to established players like Singapore Airlines, which now find themselves under siege in several crucial markets.
Air India’s growing popularity, particularly in the Middle East and Europe, has posed a challenge for Singapore Airlines, which once enjoyed a more prominent position in these regions. Air India’s move to introduce more competitive ticket pricing on its international routes has forced SIA to rethink its pricing strategies, which, in turn, has led to reduced profitability.
The Path Forward for Singapore Airlines
As Singapore Airlines looks ahead, its leadership must confront a changing competitive landscape. To combat the rising threat from Air India and other low-cost carriers, SIA will need to focus on maintaining its premium service offerings while simultaneously finding ways to cut costs and optimize its operations. The airline may also need to adjust its route network to prioritize more lucrative markets while scaling back on routes where competition has become unsustainable.
Additionally, the airline may look to innovate in areas like customer loyalty programs and partnerships to retain its existing customer base and attract new passengers. In an industry where profitability is often tightly connected to brand perception, Singapore Airlines will need to demonstrate its ability to adapt to the evolving needs and preferences of travelers.
Singapore Airlines’ steep decline in net profit is a clear reflection of the increasing pressures faced by legacy carriers in a highly competitive environment. While rising fuel costs and operational expenses have undoubtedly played a role in this downturn, the growing influence of Air India, along with its aggressive expansion strategy, cannot be overlooked as a significant contributing factor.
Moving forward, Singapore Airlines will need to adapt to a rapidly changing market, finding ways to balance cost control with maintaining the premium service it is known for. The competitive landscape in Asia is only expected to intensify, and how SIA responds to these challenges will likely determine its future profitability and market position.
