Air Industry turbulence

Air disaster's have a way of changing the lookout of an airline.  From the Edge:

KUALA LUMPUR: Low-cost carrier AirAsia Bhd, whose share price dropped by as much as 12.9% yesterday on news that one of its planes had gone missing on its way to Singapore from Surabaya, Indonesia, may experience some weakness in the near term, said aviation analysts.

As at press time, the Indonesia AirAsia plane had yet to be found, which disappeared after its pilot failed to get permission to fly higher to avoid the bad weather on Sunday. The plane, an Airbus 320-200, was carrying 162 passengers and crew. 

Malaysia hasn't had a very good year in the aviation industry.  A concentration of air disasters in one country has never been seen before in history and is unprecedented.

Will Air Asia be alright?  I think they will be but they will suffer.  It goes without saying that this disaster will thoroughly trash the stock.  For one, Air Asia Indonesia faces two sources of customer drain, the risk adverse which won't fly with an airline that has had disasters and the prospect of a nation angry at them (Indonesia).

It may not even be right, but that's probably what is going to happen.  While Air Asia is dominant in Asia, it is not the only alternative in the low cost carrier industry.  People will jump to other airlines no matter how illogical or petty their grievance is.

The air disaster will do major damage to Air Asia's brand name. The one advantage Air Asia has is its brand name and if that brand is tarred, the chances to do well in the future drop drastically.  Everyone of their competitors are probably chomping at the bit at this moment