Citigroup said Southeast Asian full service airlines, except Garuda Indonesia, have weak pricing power and have to decide on a trade off between yields and load factors, while low cost carriers were better able to pass through costs.
The broker kept its sell ratings on Singapore Airlines, Tiger Airways Holdings, Malaysia Airline System and AirAsia, citing their rapidly diminishing and low abilities to pass through high jet fuel costs in 2012.
But it maintained buy recommendations on Garuda and Cebu Air Inc. It said Cebu Air's cost pass through ratio rose throughout 2011 due to measures such as fuel surcharges, unbundling of baggage fees and raising ancillary charges.
Garuda had consistently high cost pass through ratios throughout the first quarter to third quarter of 2011, Citi said.
So far this year, shares in Tiger are up about 20% and Garuda has surged about 30%.
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