Wednesday, December 16, 2015

Better times ahead for Singapore Airlines group

It has been a slow year for the Singapore Airlines (SIA) group.

Since April, when the group consolidated operating numbers for all four passenger arms - SIA, SilkAir, Scoot and Tigerair - overall year-on-year capacity has grown for just four out of eight months.

The biggest jump in capacity, measured by the number of seats offered multiplied by distance flown, was 1.3 percent in October.

The muted growth was due mainly to slowdowns at Tigerair and the premium parent carrier. Meanwhile, the group's long-haul budget arm, Scoot, and regional subsidiary, SilkAir, continued to grow. Last month for example, Scoot, which has been taking delivery of its new Boeing 787 aircraft, grew its capacity by more than 42 per cent compared with November last year.

SIA and its subsidiaries are carrying more passengers than before and filling up more seats per aircraft. This has a positive impact on the bottom line, analysts said.

UOB Kay Hian's K. Ajith said: "By managing capacity, SIA has been able to improve average passenger loads for the last five consecutive months, which is positive.

"Codeshare deals with partner carriers have also likely helped. Every flight has a break-even passenger load factor, so anything above that translates into earnings."

Last month, industry think-tank Centre for Aviation named SIA's chief executive Goh Choon Phong Asia-Pacific Airline CEO of the Year. The center noted his successful implementation of several major new strategic initiatives that have positioned the SIA group for future growth despite competition from low-cost carriers and Gulf carriers. This includes starting Scoot and joint-venture airline Vistara in India, as well as partnerships with other carriers such as Lufthansa.

SIA plans to launch new destinations when its Airbus 350s start arriving next month. It has ordered 67 aircraft, including four ultra- long-range ones, which will fly non-stop from Singapore to the United States in 2018.

Republic Polytechnic's head of the diploma in aviation management programme, Mr H. R. Mohandas, said: "SIA is on the right track but it takes time for strategies to bear fruit. There is huge potential, for example, in recent moves by the group to align the operations of all four carriers. A strong home carrier with all four arms working as one will ultimately benefit Changi Airport and seal Singapore's status as a premier air hub."


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