Will Singapore Airlines finally get to fly trans-Pacific from Australia to the United States?

Singapore, a leading voice in advocating open skies, is hoping to conclude a more liberal aviation agreement with Australia, following a recent meeting of the two nations’ leaders, namely Singapore’s prime minister Lee Hsien Loong and his Australian counterpart Malcolm Turnbull.

Courtesy Singapore Airlines

That naturally revives Singapore Airlines’ dream of gaining rights to the lucrative trans-Pacific route from Australia to the United States.

While both Singapore and Australia have already agreed to allow carriers from both countries to operate unlimited flights between them, with Australian carrier Qantas benefitting from using Singapore Changi Airport as a regional hub to points beyond Singapore, it has been more than two decades since SIA expressed its interest in operating trans-Pacific flights from an Australian port.

A review in 2006 by the Australian authorities denied SIA’s application to fly the route that has since been opened to only American carriers besides home carriers. Despite SIA’s argument that the proposal would boost tourism in Australia, clearly Qantas was the thorn in SIA’s side as the authorities were apprehensive that the reciprocity would not be in the flying kangaroo’s favour.

Since then there has been no new overt push in that direction. So, will SIA finally get to fly trans-Pacific from either Sydney or Melbourne to the United States?

As Qantas grows from strength to strength as demonstrated by its record performance in the last couple of years, perhaps Australia could afford to be a little less protectionist.

While for now, it looks like the answer is still blowing in the wind, there is nevertheless a ray of hope emanating from the high-powered meeting.


Singapore Airlines does better without Tigerair

Courtesy Singapore Airlines

Singapore Airlines (SIA) reported 3Q (Oct-Dec 2017) operating profit of S$155 million (US$118 million), an increase of S$4 million or 2.6 per cent year-on-year. This adds up to a nine-month total of S$566 million compared to S$427 of the previous year, an increase of S$139 million or 32.6 per cent.

SIA can look forward a strong recovery for the full year, as the amount already exceeds last year’s S$386 million, which declined by S$99 million or 20.4 per cent.

Subsidiaries SilkAir and Scoot faced different fortune. Regional carrier SilkAir suffered a dip in operating profit of S$11 million or 36.7 per cent from S$30 million to S$19 million despite an increase in revenue and passenger carriage. Budget carrier Scoot on the other hand reported operating profit of S$43 million, an increase of S$25 million or 48.3 per cent, overtaking its sibling airline.

Courtesy Scoot

As a group (including SIA Cargo and SIA Engineering), 3Q operating profit was S$330 million – an increase of S$37 million or 12.6 per cent – in the absence of Tigerair, which incurred a S$79 million writedown of the its brand a year ago. This adds up to S$843 million for the nine months to December 2017, an increase of S$248 million or 41.7 per cent.

A challenge ahead would be rising fuel cost, which rose by S$86 million or 9.2 per cent in 3Q, fortunately cushioned by gains in hedging. SIA and SilkAir will face pressure on yields from more aggressive competition while Scoot without Tigerair may find opportunities in the low-cost trend for the longer haul and its appeal to millenials.

Legacy airlines go the budget way

It’s yet another sign of how legacy airlines are feeling the heat of the competition posed by budget carriers.

Courtesy Getty Images

British Airways (BA) will operate planes for the short haul with seats in economy that cannot recline. The airline said the seats will be “pre-reclined at a comfortable angle”. Affected flights up to four hours include runs from Heathrow to Rome, Madrid and Paris.

BA which already ceased providing complimentary booze and meals for the short haul last year admitted to the pressure. It said the move will allow the airline to “be more competitive” as it will then be able to “offer more low fares”.

Many legacy airlines are already adopting the “pay for what you want” model of budget carriers, charging for extras such as checked luggage and seat selection at booking.

The big three US carriers of American, United and Delta have introduced “basic economy” fares which will board such ticket holders last with seat assignment only at boarding. There may be other restrictions.

Asian rivals Cathay Pacific and Singapore Airlines (SIA) are also moving in the same direction. Cathay’s economy supersaver and SIA’s economy lite do not permit seat selection at booking and do not accrue full mileage perks. SIA is also charging additionally a credit card service fee for tickets purchased out of certain ports. (See Same class, different fare conditions, Jan 5, 2018)

While legacy airlines are finding ways to cut costs to offer lower fares, this can be a double-edged sword that only serves to narrow the gap between them and budget carriers. What price, therefore, the differentiation? But, good news for travellers not too fussy about brands.

Same class, different fare conditions

Legacy airlines, faced with increased competition from no-frills operators, are going the budget way by restructuring their economy fares.

In the United States, the big three carriers of American, Delta and United have introduced basic economy fares, which are quite akin to the budget fare. Conditions include no pre-seat selection at the time of booking, seat assignment only at the gate, last to board and other restrictions that may concern baggage allowance and flight changes.

Courtesy Singapore Airlines

In Asia, rivals Cathay Pacific and Singapore Airlines (SIA) too have revised their fare structures. At the lowest level, Cathay’s economy supersaver and SIA’s economy lite may seem attractive, but travellers should check out the restrictions so as not to be disappointed or surprised by hidden costs. Such fares do not permit pre-seat selection at the time of booking, unless you are prepared to pay a fee for the privilege. Mile accruage has also been reduced – 50% in the case of SIA and 25% in the case of Cathay.

There may be other charges. Earlier in the week, SIA announced that it would levy a 1.3% credit card service fee maxing at S$50 for outgoing flights from Singapore from January 20 only to retract the policy before its implementation, following a public outcry. However, this fee has already been introduced for flights departing Australia since November 2016 and others departing New Zealand, Belgium, the Netherlands and the United Kingdom since April last year. SIA referred the fees to as “costs relating to the acceptance of credit cards” when really it is not a fee imposed directly on the consumer but rather the vendor. It brings to mind how airlines faced with rising fuel costs so adroitly levy additionally a fuel surcharge as if it was something between the fuel companies and the consumers.

True, whatever the costs incurred by the airlines, they are likely to be passed on to the consumer. How much is reasonable will be decided by the competition, given that there is indeed fair and open competition.

Many travellers may not be aware of the different tiers of fare and their conditions, and are consequently unhappy if they had to top up what they had initially thought was an attractive offer. Same class, but different fare conditions. So, as always, caveat emptor.

A Brief History of Singapore Airlines Going Forward

Courtesy Bloomberg

The history of Singapore Airlines (SIA) dates back to the incorporation of Malayan Airways on May 1, 1947. The airline changed its name to Malaysia Airways in line with the formation of Malaysia in 1963. The entity splits into SIA and Malaysian Airlines System in 1972, seven years after Singapore left the Malaysian federation and became a nation in its own right. Then on SIA expanded quickly and became one of the world’s top airlines.

SIA established Tradewinds in 1975 as a regional carrier catering mainly to the leisure market. This was SilkAir’s predecessor as the airline looked beyond into the business segment and assumed its new identity in 1976. With the growth of budget travel, SIA partnered leading budget carrier Ryanair to set up Tiger Airways which commenced services in September 2004. Tiger underwent several changes over the years, performing below expectations. In the meantime SIA set up Scoot, a fully-owned budget subsidiary said to be targeting the medium (and now long-haul) while Tiger focused on the short-haul. The line soon blurred, and by the end of 2016, Tiger was assimilated into Scoot.

As SIA expanded as it grew, so did it reconsolidate by contracting as the aviation landscape shifted. The demise of Tiger was imminent when Scoot was formed, not only to extend the range of the budget operations but also to recapture ground lost by Tiger. The intra-competition that followed did not make much sense. The costly lesson from Tiger is that it can be hard to repair a badly tarnished image and easier to start a new slate.

Now, from four down to three, will there be further restructuring of the SIA stable?

Courtesy AFP

According to OAG, an air travel intelligence agency based in the UK, Scoot has overtaken SilkAir in the number of seats offered. The budget airline is also about a third as big as SIA in the economy market. And it is growing at a faster rate than its regional sibling. Besides, parent SIA looks set to refocus on premium travel, a move that some analysts believe to favour the expansion of Scoot, particularly when the line between budget and legacy airlines begins to blur across the industry.

This does not augur well for a carrier like SilkAir operating in the middle of the field. Since its inception, the so-called regional carrier has been operating in the shadow of the parent airline and continues to do so despite recent efforts to change that image. Does this forebode a merger between SilkAir and Scoot, going forward, although the former has time and again insisted it is not a budget airline? Can Scoot on the other hand be more than a budget carrier?

What’s in a name anyway? So says the Bard, a rose by any other name would smell as sweet.

What do Conde Nast best airports have in common?

Yet again – and again – no surprise who tops Conde Nast’s pick of the best airport, or even the top five which are located either in Asia or the Middle East What do these airports have in common?

According to Conde Nast, they stand out “with enough amenities and time-wasters that you might be a little late boarding that flight.” Such frills include indoor waterfalls and great restaurants. In other words, they have to be more than just a fucntional facility for air transportation – however efficient although one must assume efficiency is a key consideration.

Courtesy Changi Airport Group

Top in the ranks is Singapore Changi, followed by Seoul’s Incheon, Dubai International, Hong Kong International and Doha’s Hamad International.

Size matters. They are all huge airports. Changi has a handling capacity of 82 million passengers a year. Incheon is adding a second terminal which will double capacity to 100 million passengers annually, and Dubai Intl is aiming for 200 million passengers yearly. Hong Kong Intl handled more than 70 million passengers last year. Opened only in 2014, Hamad Intl is fast growing, recording a throughput of 37 million passengers last year, an increase of 20%.

They are hub airports. Dubai is now the world’s largest airport for international passenger throughput, edging out London Heathrow. Hong Kong Intl is positioning itself as a gateway to Asia in competition with Changi, with connections to some 50 destinations in China.

They are supported by strong home airlines with extensive connections: Qatar Airways (Hamad Intl), Cathay Pacific (Hong Kong Intl), Emirates Airlines (Dubai Intl), Korean Air and Asiana Airlines (Incheon) and Singapore Airlines (Changi).

They are modern with state-of-the-art infrastructure, and are constantly upgrading. Changi has recently added a fourth terminal where passengers can expect hassle-free processes from check-in to boarding without the need of any human contact.

The Asian airports offer fast rail connections to the city.

And, they are all competing to provide the most alluring “time-wasters”. Changi made news when it offered a swimming pool where passengers with time on their hand could relax and soak int he tropical sun. Now that’s also available at Hamad Intl, where you may even play a game of squash too. While Dubai is known to be one of the world’s biggest duty-free shopping centres, Hong Kong Intl is reputed for its great restaurants. Incheon is uniquely Korean with its “Cultural Street” that showcases local cuisine, dance performances, and arts and craft workshops. It also boasts an indoor skating rink and a spa. Hamad Intl too has an exhibit hall for that cultural touch.

Changi comes closest to being a destination in itself where it is said a passenger wouldn’t mind a flight delay. Besides the swimming pool, there are: an indoor waterfall, a butterfly garden, a swimming pool, vast play areas for families with children, and an array of restaurants and shops. And for passengers with at least a transit of six hours, you can hope on a free city tour.

But, of course, all these would not mean much if they are not supported by efficiency and friendly service.

United Airlines moves ahead of Singapore Airlines

Courtesy Getty Images

United Airlines does it again, stealing march on rival Singapore Airlines launching its nonstop flight from Los Angeles to Singapore – now the world’s longest nonstop flight – on Oct 28. The flight covers a distance of 8,700 miles and may take as long as 18 hours.

SIA plans to introduce a similar service next year.

Back in February last year, United started a nonstop from San Francisco to Singapore, ahead of SIA’s introduction which came months later in October.

Demand for United’s Los Angeles flight seems healthy, considering the low launch fares for a round trip as low as US$384 which no doubt boosted the sale. No doubt it is good publicity to raise awareness, and it looks like the competition will benefit travellers when SIA joins the race next year. Meantime, United enjoys the run-in to build loyalty.

In Singapore, United’s Vice President of Atlantic and Pacific Sales Marcel Fuchs said: “United is proud to launch the long-awaited Singapore-Los Angeles route for our customers in Singapore.”

In the bigger picture, United must be looking at the initiative as being “the leading US carrier to Asia” as mentioned by its senior vice president of worldwide sales Dave Hilfman, who added that the new route would consolidate the airline’s position in Asia. Conversely, Mr Fuchs said: “The addition of this new exclusive service gives more options for our customers to conveniently connect to our extensive US network.”