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SINGAPORE: The cost of airfare between two major Asian financial centers skyrocketed in the 24 hours after Singapore and Hong Kong presented plans for a travel bubble that would not require people to self-quarantine upon arrival.
The cheapest price for a return economy seat from Singapore Airlines Ltd. to Hong Kong was S $ 558 ($ 410) on Friday morning through the end of December, down from S $ 400 on Thursday afternoon when announced the news, the airline’s website showed. Business class return fares increased from around HK $ 5,000 ($ 645) to HK $ 19,000. Cheaper flights were still available on travel websites, including Skyscanner Ltd.
The coronavirus pandemic has hit Singapore and Hong Kong flag carriers especially because they have no domestic market to turn to. Before the Covid-19 outbreak, around 1 million trips were made between the two regional centers each year, data from the Singapore and Hong Kong tourism boards shows.
Hong Kong-listed Cathay Pacific Airways Ltd. closed up 6.1% on Thursday and rose as much as 6.4% on Friday as investors took in the news. The deal could increase Cathay’s monthly revenue by HK $ 90 million and reduce cash spending by as much as 6%, according to Bloomberg Intelligence analysts James Teo and Chris Muckensturm, who assume revenue on the Hong Kong route Kong-Singapore amount to about 3% of those in Cathay. total pre-pandemic.
Singapore Airlines, which rose as much as 1.4% on Friday, could see a S $ 15 million increase in monthly revenue and a 6% reduction in cash spending, Teo and Muckensturm said. The route also accounted for about 3% of their revenue before Covid-19, they said.
The number of flights between Hong Kong and Singapore plummeted due to the virus, with just 54 round trips recorded for October, 90% less than the previous year, according to the consulting arm of aviation analytics company Cirium.
“Although the travel bubble will potentially facilitate the increase in services from Cathay Pacific, Singapore and Scoot (which have continued to operate minimal services on the route until 2020), demand is expected to remain depressed in the short term as customer confidence passengers is still low, ”said Herman Tse, an analyst at Ascend by Cirium.
Still, the bubble plan has encouraged some to book flights or make travel plans. Singapore-based Clarence Foo, who works for APAC Realty Ltd.’s ERA unit, said that four Hong Kong-based Chinese nationals had told him they planned to fly to the city-state and buy luxury apartments.
“They are constantly asking about the housing market, if it is recovering and if prices are going up,” Foo said. “Some had planned to go down at the beginning of the year, but then Singapore imposed border controls. They know that the city’s housing market seems to be more resilient now as there has been more sales and prices are low, so they want to capitalize on that.” .
Under the travel bubble, mandatory quarantine will be replaced by coronavirus testing. Singapore’s Transport Minister Ong Ye Kung told reporters that he expects the bubble to start in “weeks”. Other details of the deal will be released later, the Hong Kong government said, without giving any date on when the plan will take effect.
Tan Wei Lynn, who works in the financial sector in Hong Kong, booked his ticket to Singapore shortly after the announcement. She plans to stay for several weeks and not fly back to Hong Kong until December, and thinks there will be more details by then.
“Having to self-quarantine is what kept me from traveling, and a lot of people I know,” Tan said. “Yes, the tests are expensive, but it’s not about the cost of the tests. We can’t afford to quarantine on one side. or on both sides. ” – Bloomberg
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