Singapore Deputy Prime Minister Tharman Shanmugaratnam stated that "the adaptability of the aviation sector to increasing challenges will be under more frequent and severe tests" (Xinhua, 06-Jun-2011). Speaking at the IATA 67th Annual General Meeting and World Air Transport Summit, Mr Tharman stated there is no lack of challenges facing the industry, adding that there are supply side tests such as volatile and escalating fuel prices, competition for human capital, and the challenge of ensuring stable labour-management relations, as well as questions over the ability of airport and air navigation infrastructures to keep pace with the projected growth in air traffic.
Adaptability of aviation sector will face more severe tests: Singapore minister
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Scoot 2017 outlook: challenging market conditions and Europe launch could impact profitability
Singapore Airlines (SIA) medium long haul LCC subsidiary Scoot faces a potentially challenging 2017 as it launches flights to Europe and merges with the short haul LCC Tigerair. Scoot is also planning a series of network and schedule adjustments, which are critical to the future success of the European routes and long-term profitability.
Scoot has been successful in the initial four and a half years since its mid-2012 launch, becoming profitable in a relatively quick timeframe and unlocking a new phase of growth for the SIA Group. However, 2017 will bring intense competition and ambitious expansion in markets that are not likely to be profitable in the short to medium term.
Scoot’s newfound profitability could be at risk due to yield pressures, higher fuel costs and expenses related to new long haul route launches. Scoot and its ongoing integration with Tigerair are necessary strategically, and should improve the SIA Group’s long-term position, but the short-term outlook is relatively cloudy.
Singapore Airlines 2017 outlook: further pressure on yields as premium position is reinforced
Singapore Airlines (SIA) faces challenging market conditions in 2017 as fierce competition and overcapacity continue to pressure yields. The parent airline’s capacity, which is now below 2008 levels, will again be relatively flat.
SIA has responded to structural changes in the industry by growing its budget airline subsidiaries while reinforcing the premium position of its parent airline through a series of investments. In 2017 these investments will continue as premium economy is incorporated on more aircraft and new long haul business and first products are introduced.
SIA’s position in the long haul market has been significantly impacted by ambitious expansion and aggressive pricing from Gulf and North Asian airlines. The short-term outlook is relatively bleak, with further yield declines impacting profitability.