Singapore Airlines

Wellington International Airport plans NZD300million runway extension to attract long-haul services

Wellington International Airport (WIAL) plans to extend its existing 2,000 metre runway by 300 metres so as to allow New Zealand’s capital city to attract direct long-haul services to Asia and North America using the Boeing 787 and Airbus A350.

The airport argues its geographic position at the centre of the country, and the nation’s domestic hub, means it is well placed as a third international gateway to Auckland and Christchurch. Based on its research the airport says sufficient numbers of passengers already fly to Auckland to connect with onward long-haul services to sustain a daily direct service to an Asian hub.

The exponential growth forecast from Asian markets combined with the lower operating costs and improved performance of new generation widebody aircraft are likely to make direct services to secondary destinations like Wellington a more viable proposition by the end of this decade, reducing the financial risk of extending the runway which could not have been contemplated a decade ago. Nonetheless, risk it is. But the rewards are (potentially) high.

SWISS: is the star in the Lufthansa Group starting to fade?

Since its takeover by Lufthansa in 2007, SWISS has outpaced its parent’s passenger growth and has been the most profitable carrier in the Group. SWISS’ long-haul network, significant for a carrier of its size, reflects the combination of a small domestic market with an affluent population. Moreover, its long-haul market position is strong.

Playing to its strengths, ASK growth of 2.7% in 2013 will focus on long-haul, specifically driven by SWISS’ new Singapore route and additional capacity on New York and Beijing, while short/medium-haul capacity is reduced.

On the other hand, operating profit has been on a declining trend since 2007. For some years, unit costs have been falling, but unit revenues have been falling faster. Moreover, analysis of its unit costs reveals its CASK to be among the highest in Europe. While the Lufthansa Group expects to beat 2012’s operating result this year, SWISS is only targeting a similar result to last year, suggesting that its period of over-achievement may be ending.

Singapore Airlines needs more partnerships to complete new long-term strategy

Singapore Airlines (SIA) continues to be on the lookout for new partnership opportunities, including potential equity stakes in airlines from key emerging markets such as China and India. While the SIA Group has undergone a dramatic strategic shift over the last two years, the partnership component of its new long-term strategy remains largely unwritten.

Close tie-ups with Virgin Australia, which includes an equity stake which was recently increased to 19.9%, and SAS could be followed by new partnerships with Asian carriers. The SAS and Virgin Australia partnerships, both of which have come under the leadership of SIA Group CEO Goh Choon Phong, are noteworthy but neither carrier serves Singapore or operates from a growth market.

SIA needs a larger portfolio of robust partnerships. But it can make a difficult bedfellow. Forging the right partnerships could prove to be the most challenging aspect of the new SIA strategy.

Premium air travel: structural demand slide provides revenue headwind, but who is most exposed?

Across the world, premium air travel demand has slackened. And it is hurting the world's airlines.

In the early days of aviation, it was all about the glamour. Images from the 1930s and 1940s evoke an era of silver and linen service, with passengers and crew dressed as if they were in one of Europe’s grand hotels rather than in a noisy metal tube dodging bad weather and landing to refuel on any flight longer than a few hours. As air travel became more popular and affordable, first class cabins remained the domain of the rich and famous, but the advent of business class gave busy executives a haven from their daily stresses and appealed to the ambitions of the aspiring rich and famous.

Now, in the era of low-cost carriers, aviation is mostly about getting from A to B as cheaply as possible. Airlines such as Southwest, Ryanair and AirAsia have led a popular revolution democratising air travel and making it as accessible and common-place as catching a bus.

So where do first class and business class, collectively known as the premium cabins, fit into this new world?

Tiger Airways narrows losses in FY2013 - but challenges for FY2014 remain

Tiger Airways has narrowed its losses in the year to 31-Mar-2013 and extended its operating profit to a second consecutive quarter while forecasting a positive operating result by mid-Jul-2013 after the sale of 60% of Tiger Australia to Virgin Australia is completed.

The carrier also plans to add frequencies to high demand routes between Singapore and Malaysia and expects to take delivery of 10 A320 during the financial year, half of which will be allocated to the Singapore operation and the remainder between Tiger Australia and two associated airlines, Mandala and SEAir.

Tiger Singapore will use the aircraft to increase capacity by about 25% by the end of FY2014 and taking advantage of expanded bilateral rights between Singapore and Indonesia which will also boost Mandala. However, the group still faces significant challenges as it strives to nurture three affiliated carriers in Australia, Malaysia and the Philippines to profitability.

Tiger and SIA/SilkAir lead race to expand in Indonesia-Singapore market with AirAsia lagging behind

Competition in the Indonesia-Singapore market will intensify in 3Q2013 with Singapore Airlines (SIA) adding capacity while its regional subsidiary SilkAir and low-cost affiliate Tiger Airways each launch services to two new Indonesian destinations. Garuda Indonesia, Tiger affiliate Mandala Airlines and Jetstar are all planning to follow SIA, SilkAir and Tiger in adding capacity in the dynamic Indonesia-Singapore market.

The surge in capacity is in part made possible by a newly expanded bilateral agreement between the two countries. Slot constraints, however, threaten to impede growth for some carriers operating in the market and make it difficult to use newly awarded traffic rights. For example, Indonesia AirAsia has already been set back by slot constraints at Changi Airport in attempts to launch three new routes to Singapore.