Southeast Asia’s budget airlines are heading into the second half of 2026 with recovery hopes under pressure as elevated fuel costs, weaker regional currencies and softer household demand continue to squeeze earnings. AirAsia, Scoot and Cebu Pacific all face a difficult peak season after second-quarter results showed losses or widening losses despite efforts to lift fares.
AirAsia and Cebu Pacific both reported net losses, while Scoot’s operating loss nearly doubled as passenger unit costs rose 21.7% in the quarter to June. Cebu Pacific’s fuel expense more than doubled, hit further by peso weakness, though it hedged about 30% of its third-quarter fuel needs below $120 a barrel. AirAsia also battled higher dollar-denominated fuel and leasing costs after the ringgit, baht, rupiah and peso weakened against the US dollar.
The carriers had tried to pass on part of the fuel burden through higher fares, but pricing power remains limited in a market dominated by cost-sensitive travellers. Industry analyst Brendan Sobie warned that strained household budgets could curb travel by Southeast Asia’s middle class through the rest of the year and into the crucial peak season.