SilkAir steps out of SIA’s shadow

FINALLY, regional airline SilkAir is stepping out of parent Singapore Airlines (SIA)’s shadow. If indeed that is happening, it sure has taken a long, long time to come into its own since the carrier was first formed in 1976 under the Tradewinds name before it was renamed in 1992.

The SIA subsidiary announced a Boeing deal of up to 68 aircraft, of which 54 are firm orders worth S$6.1 billion (US$4.9 billion) – growing its fleet from the current 21 aircraft. Outgoing chief executive Marvin Tan has been reported to say: “The last couple of years have been strong and moving forward; while there will be business cycles, we believe in the long-term potential of travel in this region.”

That underscores a shift in the SIA Group’s strategy rather than one that is entirely SilkAir’s. Since its inception, incurring losses in its early years, the regional carrier has often been viewed as supplementary to parent SIA’s operations, filling in gaps that SIA has vacated or does not deem viable for its full-service operations. Indeed, as SIA chief executive Goh Choon Phong reportedly told The Straits Times (Aug 5, 2012), the group could no longer just bank on the parent carrier to keep flying high.

The recent economic crisis and its continuing uncertainty that has affected premium travel and SIA’s long-haul operations has shifted the Singapore flag carrier to focus more on the Asian region, especially when low-cost operators are growing at a faster rate than full-service airlines. Changi Airport itself is testimony to this. Asia continues to be its key growth driver, accounting for some 80 per cent of all passenger traffic. Low-cost carriers make up close to 30 per cent of all flights.

Besides refocusing on SilkAir, SIA is also giving more attention to partially-owned budget carrier Tiger Airways and has started a new budget subsidiary Scoot which has commenced operations to Sydney in Australia. Surely SIA cannot ignore rival Qantas’ efforts at pushing its budget Jetstar brand in the region. While it at the same time raises the question of SIA approaching the crossroads of an identity crisis, it is time too for SIA to allow room for its babies to grow!




About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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