Singapore’s airlines experienced mixed results in the quarter ending 31 December 2016, as lower passenger demand was offset by reduced fuel costs.

National carrier Singapore Airlines experienced a sharp 16.6% drop in its operating profits, to SG$151 million (US$107m), while SilkAir’s quarterly profit fell 9.1% to SG$30m.

The group’s two low-cost carriers fared slightly better, with Tigerair’s operating profit holding steady at SG$9m, and Scoot rising 10.0% to SG$20m.

Across the group, revenue fell 2.5%, with a sharp decline at SIA partially offset by rising turnover at Scoot. But the group was also able to reduce its expenditure by 2.8%, including a SG$200m saving on fuel. This allowed overall group operating profit to edge up 1.7% to SG$293m.

Looking ahead, the group said that is expects 2017 to be “another challenging year”, with issues such as overcapacity and strong competition putting profits under pressure.

“The group will maintain vigilance over its costs, and its strong balance sheet positions it well to weather the many challenges ahead,” it concluded.