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Big changes ahead in Singapore?

3-Jan-2006

SYDNEY (Centre for Asia Pacific Aviation) - Singapore Minister Mentor, Lee Kuan Yew, has reiterated calls for Singapore Airlines (SIA) to “substantially” cut costs in the face of increasing competition from aggressively expanding Indian and Middle East carriers.

Just two years ago, Mr Lee stated that SIA and Changi Airport needed to cut costs by up to 15% to raise international competitiveness. He later urged the sale of SIA's ground handling unit, Singapore Airlines Terminal Services (SATS), and called for further outsourcing, stating the carrier needed to "take its medicine now" to "prevent major surgery" later. (Singapore Government interests own controlling equity in SIA, so there are reasonable prospects that the influential call will be heeded.)

Mr Lee last week said SIA should divest SATS and SIA Engineering Co as early as this year if SIA is to stay lean, nimble and focused. The SIA Board will consider the proposal at its next meeting.

Meanwhile, Mr Lee welcomed recent progress in labour relations between SIA and its unions, stressing the carrier’s competitive advantage lies in its special culture of 'intelligent cooperation motivated by self-interest’.

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