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Based at Singapore Changi Airport, Singapore Airlines is the national carrier of Singapore. Using a fleet of wide-body Boeing and Airbus aircraft, including the A380 of which Singapore Airlines was the launch customer, Singapore Airlines operates an extensive network across Asia, North America, Australasia, Europe, Africa and the Middle East. Singapore Airlines joined the Star Alliance on 01-Apr-2000.
Location of Singapore Airlines main hub (Singapore Changi Airport)
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Cathay Pacific's planned four-weekly Hong Kong-Manchester service, due to start in Dec-2014, will see it bring service to Hong Kong's largest un-served long-haul destination. Cathay will seek to claw back gains made by Emirates, which carried an estimated 38% of Hong Kong-Manchester traffic in 2013, according to OAG Traffic Analyser. Manchester is Emirates' largest destination from Hong Kong after London. 19% of the HKG-Manchester market transited London from either a British Airways or Cathay long-haul flight to a BA domestic flight, while 5-9% of the market travelled with each Air France, Finnair, KLM and Qatar. Cathay's service will be Manchester's first non-stop flight to East Asia; Singapore Airlines' daily flight is via Munich.
The new route is about much more than Hong Kong origin traffic. Cathay will be able to tap the Australia-Manchester market, also currently held by Emirates, as well as a number of other destinations. The new move comes as Cathay seeks to re-balance its network, which in recent times has tilted towards short-haul, where Cathay is facing extreme competition. A top-up 777-300ER order in Dec-2013 should see Cathay continue long-haul growth.
Zurich and Munich are the next largest European destinations not served by Cathay from Hong Kong, while in North America Cathay's service to Newark means it serves all seven of Hong Kong's largest markets, leaving Seattle and Boston. However these markets are smaller so it is uncertain whether Cathay will find them sufficiently attractive.
The legacy airline pivot towards the world’s new network carriers is taking quiet but potentially significant strides in Asia: Cathay Pacific is to partner with oneworld Qatar Airways; Singapore Airlines expands its partnership with fellow Star Alliance member Turkish Airlines.
Cathay and SIA, Asia’s two benchmark carriers, have generally been resolutely independent, an approach that worked in their heyday but now shows limits as competition mounts. The driving strategy is succinctly described by SIA in a statement about growing its partnership with Turkish: “We can jointly do more together than we could each do on our own” – the whole is greater than the sum of the parts.
Those are powerful words, perhaps unimaginable a few years ago for SIA. But to be clear, these fall far short – at least for now – of the landmark agreements between Qantas and Emirates, or Etihad and Air France. The partnerships are young and any growth will take time to build, from beyond destination access to codeshare rates that determine how much traction these alliances will have. Etihad-Air France at 18 months old is still being defined, so these first steps from Cathay and SIA are important, even if the path ahead is long.
Australia is close to attracting service by the end of 2014 from at least three new Southeast Asian carriers. Up to 10 Southeast Asian carriers, including five from Indonesia alone, could launch services to Australia by the end of 2016.
The new entrants, along with continued expansion from the 20 carriers already operating scheduled flights flights between Australia and Southeast Asia, will impact a market that is already suffering from overcapacity. Further reduction in fares will likely result, particularly as all but one of the potential new entrants are low-cost carriers.
The new competition poses yet another new challenge for the Qantas Group, which is struggling to compete in the Australia-Asia market. Other full service airlines – including Singapore Airlines (SIA), Garuda, Malaysia Airlines (MAS) and Thai Airways – will also have to adjust plans as the Australia-Southeast Asia market sees further significant increases in the LCC penetration rate beyond the current 30%.
Amid the smoke and noise of Qantas’ reporting of its 1H2014 results, Virgin Australia’s announcement of a pre-tax loss of AUD50 million for the period went almost unnoticed. Most media columns covering Virgin came from Qantas, in the context of their contrasting models, foreign ownership and the utter silliness of the Qantas Sale Act.
As it was, Virgin Australia’s loss was pretty much as anticipated, although involving several dimensions in the year-on-year comparisons, given the carrier’s apples and oranges situation, with AUD18.4 million (USD16.4 million) loss-making Tigerair Australia (now 60% owned) joining the group in Jul-2013 and as “business transformation and other expenses” accounted for another AUD69 million (USD61.6 million). During the first half of the FY2013, Virgin had also acquired Skywest, further clouding financial performance comparisons.
As CEO John Borghetti implied in his presentation, these first half results for Australia’s industry were however about more than merely dollar figures, given the strategic upheavals prefaced in the political debate currently raging: “I believe this is an important crossroad in our industry's history”.
It is certainly one of them – but it won’t be the last in what promises to be a turbulent decade for Australia’s airlines.
SilkAir 737 MAX fleet to open up network options while boosting Boeing’s narrowbody presence in Asia
While Singapore Airlines regional subsidiary SilkAir is now celebrating delivery of its first of 23 737-800s, it is the second part of its largest ever aircraft acquisition programme that could be a game changer. The Singapore Airlines (SIA) regional subsidiary plans to take the first of at least 31 737 MAX 8s in 2H2017, enabling efficiency improvements and new medium-haul routes.
SilkAir will have the opportunity to use the MAX’s improved range to open new destinations in North Asia, Central Asia and Australia. The improved economics of the aircraft also potentially opens up destinations in India and China which are not viable with current generation narrowbody aircraft.
SilkAir is only one of four Asian carriers that has so far committed to the 737 MAX, along with Thailand’s Nok Air, Virgin Australia and Indonesia’s Lion Air. Nok, which announced its order at the recent 2014 Singapore Airshow, also expects to be one of the first carriers to take the MAX when it enters service in 2H2017.
Singapore Airlines (SIA) regional subsidiary SilkAir began a new chapter on 20-Feb-2014 as its first Boeing 737-800 entered service, taking over from slightly smaller A320s on four short-haul sectors. The carrier has just completed a momentous week as 21-Feb-2014 marked its 25th anniversary while on 17-Feb-2014 it rolled out a new brand campaign emphasising its full-service offering.
SilkAir has been extremely successful over the past decade, with steady profits and growth despite low-cost carriers invading its home market. LCCs now account for one-third of total capacity in Singapore and about half of the short-haul market, compared to virtually zero 10 years ago.
SilkAir, however, faces some of its biggest ever challenges as it begins its 26th year. Singapore’s short-haul market is suffering from overcapacity, impacting yields and load factors across LCCs and full-service carriers. SilkAir is fighting back with product, network and brand improvements but the market will not likely be able to fully absorb the capacity it is adding in 2014 as it places into service eight 737-800s.