Singapre Airline Terminal Services under pressure
SYDNEY (Centre for Asia Pacific Aviation) - SATS' loss of key customer, Tiger Airways, is a major boost to new entrant Changi Airport handler Swissport.
Tiger's CEO, Tony Davis, cited Swissport's track record in handling successful LCCs in Europe and North America for the switch. The five-year contract is a profile booster for Swissport in Asia's rapidly growing LCC market. It also more than doubles Swissport's business at Changi from eight services a day by five customers to 18 a day with six customers. Tiger Airways will operate from the new Budget Terminal from 26-Mar-06.
SATS stated that the loss of Tiger Airways was not material to earnings, and added that Air Sahara, Jet Airways and Pakistan International Airlines had joined its list of clients in 2005.
But the addition of the third ground handler at Changi has seen SATS' share of cargo volume drop from 80.4% in 2004 to 79.7% in 2005. While Tiger carries little cargo, it is one of Changi's fastest growing airlines, with plans to add five new A320s this year, representing a strong revenue growth stream for flight handling. Swissport is also adding new tenants to its new SGD15 million cargo warehouse at Changi Cargo Complex in coming weeks.
SATS also faces ownership changes in 2006, with senior government figures calling for Singapore Airlines to divest its 85% shareholding in the handler as part of a plan to stay competitive. SATS is also seeking to retain Qantas/Jetstar Asia/Valuair business, with the outcome of crucial contract negotiations pending.
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