Monday, February 27, 2012

Singapore Airlines saying goodbye to Boeing 747 amid rising fuel costs

Facing a continuing global economic slowdown and rising crude oil prices, Benjamin Chan, Singapore Airlines Ltd’s president for Taiwan, talked about the company’s plans and the industry outlook on Friday as he sat down with a select group of reporters, including ‘Taipei Times’ staff reporter Amy Su

Taipei Times (TT): What will be Singapore Airlines Ltd’s (SIA) most important plan for this year?

Benjamin Chan : One of the company’s major plans this year is to retire all of our Boeing 747 aircraft in the passenger sector, with the last commercial service to be run on March 24 and March 25, flying between Singapore and Melbourne. In addition, the company will operate special commemorative flights between Singapore and Hong Kong on April 6 to mark the retirement of the Boeing 747 planes after nearly four decades of service in SIA.

It is not easy to say goodbye to the Boeing 747, as these airplanes have played an important role in helping the company become the global airline that it is today. However, the company has to outpace the sector in upgrading the fleet, setting new benchmarks with every new generation of aircraft that we introduce to keep passengers safer and more comfortable.

TT: Is the decision to retire the Boeing 747 related to the recent rise in crude oil prices? How will the carrier deal with this oil price issue?

Chan: The rise of oil prices is absolutely the major uncertainty for the airline sector this year, while the persistently high jet fuel price has adversely affected the SIA Group’s performance. [From April to December last year, the SIA Group posted a net profit of S$374 million (US$297.89 million), a decline of 59 percent from S$921 million for the same period in 2010.]

Indeed, this is one of the major factors of the Boeing 747 planes’ retirement in SIA, as we want to promote both environmental protection and energy efficiency. Therefore, energy-saving quality will definitely be an important element for us when picking up new aircraft in the future.

TT: Since the sector met strong headwinds in the air cargo business last year amid global economic uncertainty, what is the cargo outlook this year?

Chan: The company has decided to cut the cargo sector’s capacity by 20 percent through summer to cope with a still-weak demand this year. Unlike some of our peers, SIA has not seen the necessity to take any cargo aircraft out of service thus far, but we will carefully monitor the situation to see if it is inevitable for us to idle a cargo plane.

TT: How about the passenger sector? What is SIA’s focus this year?

Chan: We will focus more on the Asia-Pacific region this year by increasing flights to India, China, Australia, Indonesia and Japan, as we are seeing more opportunities in these markets.

As for the long-haul routes that cost the company more in fuel use, we may reduce the number of direct long-haul flights flexibly to control the operational costs. For example, the company has reduced the number flights of [our] Singapore-Los Angeles route to five a week, from one a day.

TT: What about SIA’s plan for the Taiwan market this year?

Chan: The company’s strategy in Taiwan is always to create a niche in the market by offering unique travel products. We have two special travel packages this year — one is to Australia’s Darwin, while the other is to Singapore. We expect the package to Darwin will attract many Taiwanese travelers to popular tourist destinations in Australia’s Northern Territory, while the package to Singapore will highlight the Singapore Formula 1 race.

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