S Minister: Face up to present realities
During the impact of SARS and the Iraqi war, SIA pilots and employees suffered wage-cuts to help SIA cut costs and stay competitive. In other sectors in the economy, employees also suffered wage-cuts or retrenchment to help out their companies in the ailing economy.
But the SM and no ministers ever had their salaries cut. This is the reality of the matter. So please SM, face up to the present realities: No minister including the SM did play a part in sacrificing a salary cut. Also, no Minister including the SM dared to do or voice something about cutting their salaries, when all other employees who earned less that the Ministers' salaries had to do their part by sacrificing their hard earned wages or suffered retrenchments just to help the company stay alive or competitive.
And after the pilots had done their part, the Ministers, especially the SM kept harping on the point that pilots must do this or must do that etc. So, SM are going to face up to the present realities before you ask pilots to face the new realities? For a start, I think you and your ministers are paid too much in a time like this.
In The Straits Times, 18 December 2003:
SM to pilots: Face up to new realities
Low-cost airlines and other uncertainties pose serious threats to SIA and its staff if they do not adapt quickly, he warns
By Paul Jacob
SENIOR Minister Lee Kuan Yew yesterday served up a reality check for Singapore Airlines and its employees - particularly its pilots - on the oncoming serious competition from low-cost carriers.
-- LIANHE ZAOBAO
And even as he did so here, back in Singapore the Government showed its determination not to lose out in this new race, by announcing its interest in building a low-cost, low-charges terminal at Changi Airport to attract the budget carriers.
The aim: to retain Changi's hub status.
Transport Minister Yeo Cheow Tong revealed the plan at an airport event in Singapore, while SM Lee, at a press conference after a four-day visit here, drew lessons from the industry's upheavals elsewhere.
If the region's main carriers like Singapore Airlines do not heed the experience with low-cost carriers in America and Europe, they will face an uncertain future, he warned.
Already, there is a slew of new carriers emerging in the region - Valuair, Tiger Airways, Air Asia and Lion Air, among others.
So main carriers, like Singapore Airlines, face competition not just from one another but low-cost carriers as well.
But the Senior Minister wondered if the reality of the serious challenges ahead had sunk in.
Not for the first time, he cited the example of the impact that Sars and the Iraq war had on SIA, and the decision taken then to cut costs.
'So they agreed to cut costs, including the pilots after a lot of argy-bargy,' he recalled.
'And because we cut costs, profits rose $300-plus million in the third quarter. So they say 'Oh you cheated me', sacked the committee that negotiated the agreement, 'restore our wages'.
'Is that helpful? Does that show an understanding of the rough ride that's coming? Are we going back to what it was before or are we going into a new situation?
'I think it's necessary to spell out to everybody - and not just the pilots - that we are into a new situation.'
The comments marked the second time he was addressing the squall in the pilots' union, after a 55-per-cent-majority at a special meeting of the Air Line Pilots Association-Singapore ousted its leaders last month.
Yesterday, Mr Lee said that he believed the regime of regulated and restricted traffic rights will change because of the growing demand for low-cost travel - within 10 years or sooner.
In the United States and Europe, deregulation led to a sprouting of budget carriers, of which only two or three survive.
But they eat into the margins of the mainstream carriers, as the latter also have a large chunk of tourist class passengers.
In the US, he noted, airlines emerge, grow and then go under - some seeking Chapter 11 protection from creditors - and try to start again with a lower cost base.
Do Singaporeans want to see SIA go into the equivalent of Chapter 11, he asked, warning that it would be a painful process for everyone, as jobs would be at stake.
He noted that SIA, with assets of $11-billion, is hoping to make earnings of $600-million in its current financial year ending March 31 - about a 6 per cent return on equity.
But some union members think it is a huge gain.
'If in fact it is a magnificent profit, the price of SIA shares would have risen. It didn't rise. So I think it's necessary to educate the workers that if the company does not produce an adequate rate of return in the end, you lose jobs,' he said.
Yes, the low-cost carriers may have jobs, but he asked: 'If you are a pilot or worker in a low cost airline, do you think you'll get perks and salary as you get in the main airline?'
In Europe, pilots of some low-cost carriers help clean aircraft to save time and cost.
'You don't do that in SIA. You come in clean, nicely dressed,' he said.
Urging them to recognise the rough business conditions ahead, Mr Lee said: 'Think carefully.'