3rd Aussie Airline still being considered (Cheong Choong Kong)

[Wirraway]

AsiaPulse

Tuesday July 8, 5:53 PM AEST

Singapore Airlines Eyes New Domestic Carrier in Australia

BRISBANE, July 8 Asia Pulse - A study into setting up a third major Australian domestic airline was at an advanced stage, the retiring head of Singapore Airlines, Cheong Choong Kong, said today.

Dr Cheong, who was in Brisbane to receive a Tourism Task Force leadership award, said it would not be fair for him to discuss the airline's plans.


"Management will want to have the first word to reveal their plans," Dr Cheong told AAP.

"But the study has started and it is at quite an advanced stage."

Dr Cheong said the prospects of Australia sustaining another domestic airline were good.

"I think so - it's a matter of branding and finding your own niche and understanding your competition," he said.

The decision is expected to partly hinge on the success of Qantas' current push for a stake in Air New Zealand, which is currently a member of the Star Alliance network of airlines, of which Singapore Airlines is also a member.

A Qantas-Air New Zealand alliance would likely spell the end of Air New Zealand's Star membership, leaving the network without a local player in either NZ or Australia, following Ansett's demise.

Dr Cheong said he had been more optimistic about the state of air services in Australia six to 12 months ago "when things were getting somewhere".

"But ... there seems to be a pause, probably because of the uncertainty related to the Qantas-Air New Zealand union," Dr Cheong said.

The amiable, Australian-educated executive said he was sure the tourism industry would recover from its battering by the SARS outbreak.

"I'm sure it will recover," he said.

"Some people say that SARS may return in the northern winter - it may, but I think we would be much better prepared for it."

As for his involvement in any new airline, Dr Cheong, who is now chairman of the Oversea (Oversea) Chinese Banking Corporation, said it was "unthinkable" despite his 29 years with Singapore Airlines.

"I am now into banking, but I think I will always be an airline man at heart," he told today's Tourism Task Force forum.

"Like a Bundy and coke, it's hard to get it out of your blood."

ASIA PULSE

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[pullock]

Australian aviation was going ahead in leaps and bouds when there were three airlines. I work with pilots who went from pistons to jets in 2 & 1/2 years, now that is cool :cool: (remember the gearstick photo guys??)

The start up costs are now cheaper for an airline for every reason, than they were when Virgin and Impulse started. There is no incumbent duopoly in place, just two competitors, one of whom is leading the other in killing real customer service. With heindseight, is there a better time to startlooking toward an Australian market for a third carrier? I havn't seen one. Contrarian market theory agrees with me.

Things are down right now, and short of more negative world events which nobody can predict, the outlook us all upside for the AUS economy.

For an airline to invest here now, there is not much downside, so to grab a piece of market share at thistime means cost effectively grabbing a share of a market that will rapidly grow as the AUS economy hotts up.

[SixStarAnsett]

Maybe I'm a fool, maybe I'm too cynical. Ha, maybe I'm both (and I am not going to put a poll on this, lol). I'm probably wrong, but wouldn't it increase the value of SQ if it was rumoured to be entering into oz?

Anyhow, if it does, fantastic.

But I still think AN wouldn't have had such a rapid death spiral into collapse if DJ hadn't forced the full service majors into competition. DJ and the fullservice carriers are different products. You don't pay the same price for chalk that you pay for cheese. How could AN be expected to survive when it was selling seats for the cost of chalk? :mad:


SixStar

[Gnadenburg]

Cheong the Goose has the market all wrong again.

The Bundy and Cola set are the Vigin Blue niche. Surely a boutique style airline, priding itself on service, would be chasing the chardonnay dress circle?

Good to see the Silkair boys got their positions back. In true Singaporian style they were put on national terms. The ramifications of this as to what would be on offer from the Singaporians in a third airline interesting. The wage pressures on QF would be immense.

Would the Singaporians be a good thing for the average Australian airline employee? Certainly not QF staff. No difference for VB. A great opportunity for those no longer in the industry or abroad though.

[mainwheel]

High capacity aircraft based in singa's doing a clock/anticlock around aus.?. Get some freight contracts going as well............Whats an A310 look like........

[Wirraway]

Wed "Sydney Morning Herald"

Room for Singapore here, says airline executive
By Wendy Frew and AAP
July 9 2003

Singapore Airlines is again contemplating entering Australia's domestic aviation market despite claims the industry can't support a third carrier alongside Qantas and Virgin Blue, especially after a year like the last 12 months.

Recently retired chairman Cheong Choong Kong, in Brisbane to receive a Tourism Task Force leadership award, said yesterday the prospects of Australia sustaining another domestic airline were good. However, he did not reveal any details.

"It's a matter of branding and finding your own niche and understanding your competition," Dr Cheong said.

Analysts said Singapore Airlines would consider operating a domestic carrier in Australia to increase feeder traffic to its international business.

However, they said any expansion would be at least 12 months away because Singapore Airlines had suffered a sharp decline in passenger numbers because of fears about SARS and terrorism.

"Clearly Singapore Airlines has identified Australia as a market with a lot of potential because Singapore effectively doesn't have its own domestic market and it is keen to tap into Australia, which is quite a lucrative market," said Smith Barney transport analyst Jason Smith.

Mr Smith estimated such a move would probably mean a loss for Singapore Airlines in the first couple of years of between $200 million and $400 million and would possibly jeopardise an arrangement with Qantas providing cheaper domestic fares to Singapore Air passengers in Australia.

"You would have to question whether they would want to set up in Australia and compete with a well established and competitive carrier such as Qantas and where they would position themselves against the budget carrier Virgin Blue," Mr Smith said.

There was speculation last week that Singapore Airlines was again weighing plans to enter the domestic market. The Asian carrier said last October a tie-up between Qantas and Air New Zealand could push it towards entering the Australian domestic market.

"It shouldn't be a surprise to anyone that Singapore Air is doing some sort of scoping study on entering the Australian market," said BT Financial Group portfolio manager Troy Angus. "I wouldn't read too much into it."

Mr Angus added that Singapore Airlines, regarded as a rational operator, would approach the domestic market with caution given most observers believe it wasn't large enough to support three carriers.

Qantas shares ended 11c higher at $3.28.

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[knackeredII]

For SIA to be successful in running an airline in OZ, they would have to run it "hands off", and this they are simply incapable of doing. They have no concept of how to treat staff in an environment where contracts mean something. Industrially, this would be a difficult challenge.

[Chocks Away]

Three of SQ's execs are recently placed on REX's board...:} :cool:

[Keg]

In about two months, SIA will have been 'considering' this for the last two years! :eek: :D

[Johhny Utah]

Where's Pete Conrad to do a song & dance about how he told us all that this was in the pipeline...? Perhaps he's been kept busy by Star Alliance meetings & secret discussions...:rolleyes:

As for me - I'll believe it when I see the first aircraft take off - until then, I don't give it much of a chance at all.

Just my thoughts :D

[Pete Conrad]

Hey little Johnny Utah. Don't have to say anything that hasn't already been said.

If I was you though, I wouldn't scoff at something that you think in all your Qantas wisdom is not going to happen.It might just turn around and wipe the little smirk off your face.

If you are so engrossed in your own little world at QF and you fail to see the potential for an SQ investment in DJ when the time comes and open skies if AirNZ and QF tie up, then you really have been brainwashed.

The BRW article is great, have you read it? I wouldn't put too much faith in your defunct crystal ball Johnny. If Virgin/SQ get hold of more than 50% market share, you guys are gone. Now wouldn't that be something I could tell the boys at the next STAR meeting!!

[ferris]

IMHO I think you are thinking too small if you think this is all about domestic ops in oz. Sure, the domestic market is interesting (but I think you are more likely to see DJ get further into bed with Patricks, before a float). However, with the new crop of long-range a/c coming out, I think there will be a huge shake-up in not only the routes that people choose to get from A to C ie. which B they go via (if there is a B at all), but also who is left after the shake-out to carry them. All the current moves are just jockeying for those eventualities.
London via the U.S., anyone? And I don't mean just the leisure market, either.

[Pete Conrad]

Ferris, your on the mark hence SQ hubbing out of Australia for international flying.

[mmmbop]

The BRW article is interesting. It read like a CEO using scaremongering tactics, in order to get wages down. Whether the threat is there or not to QF's future (personally I don't believe it is) he is using this perfect time to put fear into the employees, in order to get the required reductions in employee costs.

The next step should be getting employees involved in profit sharing. Then the stories (real or perceived) about crap service in QF would all but diminish. Those FAs who are rude and don't cut it would soon be moved out by other employees (read 98% of QF staff) who do provide great service, and would like to receive share bonuses etc.

I don't think anybody could say that GD isn't a shrewd man.