Wirraway
14th Dec 2004, 14:52
channelnewsasia.com
SIA doing well fending off competition from budget carriers: Analysts
By Chua Chin Chye, Channel NewsAsia
SINGAPORE : Singapore Airlines is holding its own, fending off the growing competition from low-cost carriers.
Industry-watchers say that while SIA has met its rivals head-on in some instances of price-cutting, SIA has maintained a "steady-as-she-goes" stance.
And that is seen as the right strategy for the carrier going ahead.
It seems that the Singapore Girl can still put up a plucky fight.
Just days ago, it gave newcomer Jetstar a run for its money when it launched its S$87 promotion fare to Taipei.
But industry watchers say the move is just one way to grab the spotlight away from its rivals.
SIA, they argue is more intent on, and in fact zealously guarding and growing its premium service high-end business fares, while keeping an eye on the fringe.
And despite the fierce competition from budget carriers, especially in the Hong Kong and Bangkok routes, SIA's load factor is holding up.
Huang Cheng Eng, senior vice-president of Marketing & Planning at Singapore Airlines said: "We have been competitive. I think, at the leisure end of the market, there has been a reduction in our yield. Overall, we still hold our own in terms of load factors for the high end of the market. For example, those who go overseas for business, and for other purposes where they need flexibility, in terms of frequency to go back and forth."
SIA declined to reveal what percentage of capacity it offers at competitive rates to compete with its rivals, especially those at the budget end.
"Suffice it to say that our yield management system is a dynamic system. And it's not, say, sort of fixed number of seats. It depends on the season, and on demand situation," said Chew Choon Seng, Singapore Airlines' CEO.
In any case, analysts say the impact of budget carriers is muted for now because of their limited capacity.
But that might change over time.
Kevin Scully, managing director of NetResearch Asia said: "I think we haven't seen the full impact of low-cost carriers on the premium airlines yet. What I am worried about is that, although low-cost carriers have a short four-hour range, they can actually transport people to other low-cost hubs. That could actually start to impact your long-term yields as well, as the low-cost carriers start to move people away from the Singapore hub into regional hubs."
Still, that is not expected to happen anytime soon.
That's because the Asian travel industry is being hampered by the dearth of open-skies agreements.
For now, SIA is focused on trimming fat and managing its yields through flights and route adjustments.
Vincent Ng of Standard & Poor's believes SIA is doing just fine, growing its flight destinations and frequency.
Indeed, SIA has been adding capacity since last month, and into the new year, to destinations such as India, Australia, Taipei, Kuala Lumpur and Penang.
And that will keep the Singapore Girl fighting fit to fend off future competition. - CNA
========================================
channelnewsasia.com
2004 is the year low-cost carriers take off in Singapore
By Michael Lim, Channel NewsAsia
SINGAPORE : 2004 will go down in airline history as the year low-cost carriers took off in Singapore.
Four have set up shop here over the past 12 months alone and their presence has sparked off what is known as budget tourism.
These low-cost carriers have created quite a buzz but once the novelty dies off, the challenge is for them to survive the intense competition.
Low-cost carriers may be new but Singaporeans appear to have taken to them in a big way.
Still, there is no doubt that competition is highly intense and some industry watchers say consolidation is just a matter of time.
"I don't think its big enough for five. In the US there is only one successful carrier Southwest Airline. Later I think there will be some consolidation in the industry. In fact for airline industry economies of scale is very important. The bigger the scale is, the bigger the cost saving," said Gary Zhang, research analyst with Sun Hung Kai Research Hong Kong.
Nicholas Ionides, regional managing editor with The Flight Group agrees.
He said: "I think it is inevitable that some of them will succeed and some of them will fail. But consolidation will happen eventually. There will be a lot of little guys and then there will be a couple of big ones. That has happened in Europe."
Malaysia's AirAsia is seen as one key player in the sector.
It has been expanding aggressively, setting up associate airlines in Thailand and Indonesia.
But its rivals are also looking at spreading their wings.
Less than a year into its operations, Singapore's first budget carrier Valuair is planning to expand its fleet and services.
It's now looking at flying to destinations up to eight hours away from Singapore, and that could take them to India and China.
Sim Kay Wee, Valuair's CEO said: "We are looking at adding one to three more A320s and we are ambitiously studying possibly a wide body jet to go further afield."
With low-cost carriers in the picture, premier airliners like SIA and Cathay Pacific may be tempted to be drawn into a price war to keep their turf.
But analysts say there is room for both types of carriers to grow.
"They are not going to kill the existing airlines. That has got to be made clear, especially as they develop more into Asia in particular. You will see the lines drawn between the low-cost airline and the more traditional airline. There is room in the market for both and they will both thrive and survive," said Mr Ionides.
Valuair's CEO added: "Down the line, I see a high of seven percent to eight percent passenger growth in Asia. The market is big enough to absorb the capacity given out by low-cost carriers."
And what that means is that air travellers will have a wider choice when it comes to booking their flights. - CNA
=========================================
SIA doing well fending off competition from budget carriers: Analysts
By Chua Chin Chye, Channel NewsAsia
SINGAPORE : Singapore Airlines is holding its own, fending off the growing competition from low-cost carriers.
Industry-watchers say that while SIA has met its rivals head-on in some instances of price-cutting, SIA has maintained a "steady-as-she-goes" stance.
And that is seen as the right strategy for the carrier going ahead.
It seems that the Singapore Girl can still put up a plucky fight.
Just days ago, it gave newcomer Jetstar a run for its money when it launched its S$87 promotion fare to Taipei.
But industry watchers say the move is just one way to grab the spotlight away from its rivals.
SIA, they argue is more intent on, and in fact zealously guarding and growing its premium service high-end business fares, while keeping an eye on the fringe.
And despite the fierce competition from budget carriers, especially in the Hong Kong and Bangkok routes, SIA's load factor is holding up.
Huang Cheng Eng, senior vice-president of Marketing & Planning at Singapore Airlines said: "We have been competitive. I think, at the leisure end of the market, there has been a reduction in our yield. Overall, we still hold our own in terms of load factors for the high end of the market. For example, those who go overseas for business, and for other purposes where they need flexibility, in terms of frequency to go back and forth."
SIA declined to reveal what percentage of capacity it offers at competitive rates to compete with its rivals, especially those at the budget end.
"Suffice it to say that our yield management system is a dynamic system. And it's not, say, sort of fixed number of seats. It depends on the season, and on demand situation," said Chew Choon Seng, Singapore Airlines' CEO.
In any case, analysts say the impact of budget carriers is muted for now because of their limited capacity.
But that might change over time.
Kevin Scully, managing director of NetResearch Asia said: "I think we haven't seen the full impact of low-cost carriers on the premium airlines yet. What I am worried about is that, although low-cost carriers have a short four-hour range, they can actually transport people to other low-cost hubs. That could actually start to impact your long-term yields as well, as the low-cost carriers start to move people away from the Singapore hub into regional hubs."
Still, that is not expected to happen anytime soon.
That's because the Asian travel industry is being hampered by the dearth of open-skies agreements.
For now, SIA is focused on trimming fat and managing its yields through flights and route adjustments.
Vincent Ng of Standard & Poor's believes SIA is doing just fine, growing its flight destinations and frequency.
Indeed, SIA has been adding capacity since last month, and into the new year, to destinations such as India, Australia, Taipei, Kuala Lumpur and Penang.
And that will keep the Singapore Girl fighting fit to fend off future competition. - CNA
========================================
channelnewsasia.com
2004 is the year low-cost carriers take off in Singapore
By Michael Lim, Channel NewsAsia
SINGAPORE : 2004 will go down in airline history as the year low-cost carriers took off in Singapore.
Four have set up shop here over the past 12 months alone and their presence has sparked off what is known as budget tourism.
These low-cost carriers have created quite a buzz but once the novelty dies off, the challenge is for them to survive the intense competition.
Low-cost carriers may be new but Singaporeans appear to have taken to them in a big way.
Still, there is no doubt that competition is highly intense and some industry watchers say consolidation is just a matter of time.
"I don't think its big enough for five. In the US there is only one successful carrier Southwest Airline. Later I think there will be some consolidation in the industry. In fact for airline industry economies of scale is very important. The bigger the scale is, the bigger the cost saving," said Gary Zhang, research analyst with Sun Hung Kai Research Hong Kong.
Nicholas Ionides, regional managing editor with The Flight Group agrees.
He said: "I think it is inevitable that some of them will succeed and some of them will fail. But consolidation will happen eventually. There will be a lot of little guys and then there will be a couple of big ones. That has happened in Europe."
Malaysia's AirAsia is seen as one key player in the sector.
It has been expanding aggressively, setting up associate airlines in Thailand and Indonesia.
But its rivals are also looking at spreading their wings.
Less than a year into its operations, Singapore's first budget carrier Valuair is planning to expand its fleet and services.
It's now looking at flying to destinations up to eight hours away from Singapore, and that could take them to India and China.
Sim Kay Wee, Valuair's CEO said: "We are looking at adding one to three more A320s and we are ambitiously studying possibly a wide body jet to go further afield."
With low-cost carriers in the picture, premier airliners like SIA and Cathay Pacific may be tempted to be drawn into a price war to keep their turf.
But analysts say there is room for both types of carriers to grow.
"They are not going to kill the existing airlines. That has got to be made clear, especially as they develop more into Asia in particular. You will see the lines drawn between the low-cost airline and the more traditional airline. There is room in the market for both and they will both thrive and survive," said Mr Ionides.
Valuair's CEO added: "Down the line, I see a high of seven percent to eight percent passenger growth in Asia. The market is big enough to absorb the capacity given out by low-cost carriers."
And what that means is that air travellers will have a wider choice when it comes to booking their flights. - CNA
=========================================