Cheong Choong "Starting new airline viable"

[Wirraway]

Fri "Sydney Morning Herald"

Singapore toys with prospect of third airline
By Darren Goodsir, Transport Editor
October 4 2002

Singapore Airlines has officially rated as "viable" its proposal to establish a third Australian domestic carrier.

In his first public comments on the Asian carrier's plans since the demise of Ansett, the airline's chief executive, Cheong Choong Kong, declined to reveal a timetable for launching an assault on the congested domestic market, dominated by Qantas and Virgin Blue.

But he hinted the market conditions were ripe for a start-up airline to take a fresh tilt at domestic travellers.

Commenting on his team's recent evaluation of Australian market conditions - and on introducing limited full-service flights to major cities - Dr Cheong said: "The information we gathered showed that starting a new airline is a viable option.

"Whether we exercise that option, and do it, is another thing.

"It depends on various conditions - and whether those conditions will come about remains to be seen.

"We have always been interested in having a permanent presence in Australia ... because the Australian market is extremely important to us.

"And by presence we mean more than just flying more frequencies to the capital cities. I think the point to note is that the game ain't over yet. The fat lady hasn't sung yet."

Last June, Dr Cheong told a meeting of the Star Alliance in Shanghai that the disappearance of Ansett had created a vacuum in international coverage that needed to be remedied.

Since then, Singapore has enjoyed good business on flights in and out of Australia - with loads on many routes better than this time last year.

It has also reached an agreement with Qantas to fly its passengers within Australia.

For the past six months, the airline's Australian-based consultant, Peter Stainlay - a former Qantas executive who helped develop the final route strategy for Ansett Mark II - has been determining if the carrier's good international business can help support the domestic offshoot.

The suggested entry of Singapore Airlines has coincided with Qantas's plans to take a 25 per cent stake in Air New Zealand. It has also come amid speculation Singapore itself may be tempted to buy out the diluted British Airways shareholding in Qantas.

"I can only say that in this funny business, anything is possible - and I wouldn't rule anything out," Dr Cheong said.

"I never comment on talks, or the absence of talks, or who they are held with."

Dr Cheong said exploiting the congested domestic market - including the Sydney-Melbourne-Brisbane crush where securing a seat at short notice often meant a large fare - was an issue which "featured prominently in our study".

"But we won't commit ourselves to a schedule," he said.

"You won't be hearing from us on this subject next week, or maybe even next month - but beyond that, I really honestly can't say."

Dr Cheong said the airline was examining investment opportunities "not confined to just Australia.

"There are developments elsewhere and whether and when we invest in that third Australian airline will depend, among other things, on how developments in other places progress."
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Fri "The Australian"

Third airline 'viable'
By Steve Creedy
October 04, 2002

SINGAPORE Airlines executives believe a third domestic carrier is a viable option, confirming yesterday the battle for Australia's skies is far from over.

Singapore chief executive Cheong Choong Kong said the airline was keeping its options open, but warned those options were not confined to Australia.

He would not reveal the alternatives, but said the airline's healthy balance sheet did not mean its resources were unlimited.

"For us there are developments elsewhere – and whether or when we invest in that Australian airline will depend, among other things, on how developments in other places progress," he said in Sydney.

Dr Cheong said high load factors and difficulties getting seats on some routes had featured prominently in the airline's study of the Australian market.

Australia is one of Singapore's biggest overseas markets and the airline has a long-term interest in expanding here.

Its evaluation here included assigning a local executive and a small team from Singapore to look at issues such as domestic airport access.

"The information that we gathered certainly showed that starting a new airline is a viable option," Dr Cheong said.

"Whether we exercise that option and when we do is another thing.

"We're not going to make a decision in a hurry.

"I think the thing to note here is the game ain't over yet, the fat lady hasn't sung."

He did not rule out Singapore Airlines taking a position in Qantas if British Airways sold its stake.

But Dr Cheong said the idea of a wider Australasian grouping of airlines, raised by Qantas chief Geoff Dixon, was "just a concept at present, and very much Geoff Dixon's concept".

Singapore seems to be doing well in the post-Ansett environment despite the collapse of its local partner. Dr Cheong said load factors into and out of Australia were "as good as, if not better than, before".

However, the airline had been affected by the loss of the Ansett frequent-flyer scheme.

It was working hard to build up its Krisflyer frequent flyer scheme and had reached a commercial agreement with Qantas.

"So while we are feeling, to some degree, the loss of Ansett, it hasn't been very severe," he said.

He declined to speculate on what went wrong with Ansett, saying the issue was still too sensitive and shrouded in emotion to comment.

"We are very, very sad that Ansett has gone under and thousands of people have lost their jobs but apart from that, as I say, the game ain't over."

The Singapore boss was also unperturbed by potential competition from Qantas low-cost offshoot Australian Airlines, due to launch this month.

Subsidiary SilkAir had lower costs than mainline airlines and the costs could be brought down further if need be, he said.