Singapore Airlines: Life with/without Virgin

siaWHAT is life for Singapore Airlines (SIA) with and without the Virgin brand? The end of last year saw the Singapore carrier breaking and joining ranks with the Virgin brand. (See Singapore Airlines’ penchant for the Virgin brand, Dec 17, 2012).

SIA acquired a 49-per-cent stake in Virgin Atlantic in 1999 at a time when it was pursuing trans-Atlantic rights between London Heathrow and New York. That investment has proven to be lacklustre, and for many years after SIA made it known it would divest the stake. Delta Air Lines came knocking and the deal was quickly sealed, but at a loss to SIA which received £224m (US$360m) for the £600m (US$965m) that it had paid. (See Finally, SIA lets Virgin go, Dec 12, 2012). It was the price for getting a heavy load off its chest.

But there is more to the affinity between SIA and the Virgin brand. In the same year, it entered into marketing alliances with Virgin Australia – and later took up a 10-per-cent stake in the carrier – and Virgin America. Through Virgin, SIA will have greater access to the Australian and North American continents, and customers of the partners will enjoy seamless transfers and common lounger facilities. (See Singapore Airlines ramps up Virgin cooperation, Nov 23, 2012).virgin

The question is: How significant are these developments in the SIA global strategy?

Both SIA and Virgin are strong brands, so the alliance should make a formidable competitive force. Yet it may not work out as aggressively as may be expected. As major airlines move towards mega alliances and mergers, such as the Qantas-Emirates partnership, it might seem that SIA and Virgin are thrown by circumstances into the same ring. Both brand names have been very successful in their own rights, and SIA has had a speckled history of lacklustre investments in other airlines – Virgin Atlantic itself and Air New Zealand, both loss-making.

Australia and the US are important markets for SIA, and connecting with the Virgin brand makes sense. But one wonders if connecting to secondary airports would significantly strengthen SIA’s positioning. SIA is very much a trunk route operator, and the two Virgins are by comparison for now more local than international. The US market is dominated by American carriers that are both domestic and international operators.

Still, it looks like an impressive strategy to tap into the hearts of both continents. Marketing alliances are easy to come by; making them work meaningfully is another story.

 

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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.

One Response to Singapore Airlines: Life with/without Virgin

  1. Pingback: Pan Australian Travel Sees Potential in Codeshare Deal between Qantas and Emirates Airlines | travel the world deals, world travel guide, holiday travel deals

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