My take on the situation is that Singapore are interested in the Australian domestic market but probably not as a player in its own right. Qantas has a strong grip on the market and Virgin smartly has positioned itself below Qantas with a differentiated product. For all the talk about how Singapore could show Qantas a thing or two about real service, the domestic market pie is only so big and the best Singapore could hope for is a small slice. As small full service carrier priced at or just below Qantas, their position would bring pressure from the other two players from above and below. Not the best place to be and far too risky IMHO.
So, if they are interested in getting their foot in the door, would not the best plan be to talk it up and give everyone the impression that you intend to enter the market, thus pushing down the market value of the two other players (take a look at Qantas's share price currently / Virgin intend to float at some stage). Do this long enough and I predict that Singapore will push for a stake in either Qantas (through BA's 25%) or Virgin Blue (just as in the Virgin Atlantic case). A far easier, less risky and much less expensive way of entering the Australian domestic market.
Only time will tell!
AA