SINGAPORE -- Despite the fall in fuel prices, Asia's aviation industry is facing headwinds as growth slows in China and other emerging markets. Emirates' move to team up with Malaysia Airlines is likely to spur competition in the region, where both full-service and budget airlines are trying to outdo one another.
Analysts are unsure how much pressure Emirates can mount with partner Malaysian Airlines continuing to restructure. Still, Singapore Airlines and other full-service carriers have to be at least a little uncomfortable seeing Emirates enhance its presence in the region.
"Singapore Airlines is already facing pressure from Middle-Eastern carriers on long-haul," said a Singapore-based analyst. Emirates, Etihad Airways and Qatar Airways have expanded to Asia in recent years with convenient connections to European cities, muscling in on Singapore Airlines' turf. A tie-up between Qantas and Emirates formed two years ago took away some of connecting passengers between Australia and Europe from Singapore Airlines. "If the partnership with [Malaysia Airlines] leads to larger capacity for Emirates, it will surely add more pressure," he added.