SIA feels heat of global competition
http://straitstimes.asia1.com.sg/new...25280,00.html?
THE airline industry is going through very significant changes, and Singapore Airlines is feeling the heat on the global and regional fronts, said NTUC chief Lim Boon Heng.
Newer airlines in the United States and Europe and the emergence of low-cost carriers all make for a difficult operating environment where only the fittest survive, he said.
In the US, mature airlines have been under great pressure from new and budget carriers. And seniority-based wage systems are not helping. Some have cut pilots' wages by up to 30 per cent.
The airline industry in Europe is also consolidating and the general view is that only three airlines there will survive the competition.
Low-cost carriers in the US and Europe have snatched away as much as 20 per cent of business from established airlines, said Mr Lim.
Here, AirAsia and Lion Air have started marketing their flights and two homegrown budget carriers - Valuair and Tiger Air - are also in the works.
And it is in this competitive environment that SIA is operating, he added.
'And we don't have the advantage of a huge domestic market to generate air travel - we are carrying other people's passengers.'
- It is once again edifying to hear such authoritative words on the global air transport industry from specialists of Mr Lim Boon Heng’s standing.
Perhaps Mr Lim could clarify his words by answering the questions that in most other countries could be posed publicly but, as egos are so huge and usually so brittle in Singapore, can only be asked in private forum, lest they be deemed “confrontational” and attract defamation suits or deportation?
Mr Lim, which are the newer airlines in the United States and Europe who are competing directly with SIA? Which US airlines have cut pilots’ salaries by 30%, can you be specific on the percentage of pilots within these airlines who received cuts of such magnitude, what were the debt:equity ratios of these airlines at the time and were the agreements reached in consultation with Aalpa? Please compare the ratios with the corresponding SIA ratio at the time.
How does the consolidation of European carriers adversely affect SIA’s position as a core member of the Star Alliance, which alliance will have definitely one and possibly two of the consolidated organizations as members?
On which routes are the European low cost carriers competing with SIA and which intercontinental carriers do they interline with? Does Mr Lim not remember that deregulation is running apace within the Indian domestic market, reducing fares and raising product quality, but he has forgotten to mention this phenomenon as a threat to SIA.
Does Mr Lim not know that AirAsia competes with SIA up to KL by operating from JB’s Senai Airport and that the Singapore Government recently refused to licence that airline’s coach shuttle from Singapore to Senai, effectively torpedoing competition from AirAsia?
Similarly, has Mr Lim not noticed that the LionAir fare, Singapore – Jakarta could not in any way be described as low cost and directly compares with those of SIA on the route?
Mr Lim, is however, I’m absolutely sure, well aware that the Singapore Government has Singaporean start-up carrier, ValueAir completely within its power in respect of Air Operator’s Certificate issue and nomination as carrier in the relevant bi-lateral air service agreements. If he is not aware of this, then certainly the putative financiers of the venture are, and even the most naďve of readers would draw the conclusion that money would not be invested if the venture was not part of the overall Government plan.
Unless Mr Lim has been visiting Mars recently, he must be aware that “Tiger” is mainly owned by SIA/Temasek, which situation places a major question mark over the entity’s competitive effectiveness against parent, SIA.
Maybe Mr Lim should stick to releasing generalized red herrings, rather than trying to be specific on industries he obviously hasn’t a clue about.