SIA: Declining yield per pax
#1
Original Poster
Join Date: Jan 2016
Location: SIN
Posts: 352
SIA: Declining yield per pax
This is a known news and been discussed that ME3 have impacted not just North American but other carriers too, including SQ.
However, the fact that the below article appeared in local media and its language, intuition tells me the next move to cut costs will be justified based on this news below.
Thread open to discuss potential cost/ service cuts, including the possibility of an olive cut from meals.
Bloomberg article
My thoughts:
- Minor ramp down in meals (quality/quantity)
- Devaluation in award chart
- Unlikely they will discount heavily
However, the fact that the below article appeared in local media and its language, intuition tells me the next move to cut costs will be justified based on this news below.
Thread open to discuss potential cost/ service cuts, including the possibility of an olive cut from meals.
SINGAPORE — Singapore Airlines (SIA) is fighting to prevent travellers from switching to Emirates Airline, which is offering luxuries like on-board shower, while budget carriers are chipping away at the coach class. The result: The lowest yield from passengers in six years.
Yields, or the revenue earned from a passenger for flying a kilometre, was 10.6 Singapore cents in the year ended March, dropping from 11.2 cents a year earlier. That damped full-year net income to S$804 million, or about a quarter of what Emirates racked up in the same period.
South-east Asia’s biggest airline by market value is facing increasing challenges to retain customers as the Middle East carriers expand more into the region and about a dozen low-fare offerings seek to win business on short-haul routes from Singapore to resorts like Bali and Phuket. To fight back, Chief Executive Officer Goh Choon Phong, 52, has ordered more than US$10 billion (S$13.7 billion){ of new aircraft and formed alliances from Australia to India as Asia is poised to become the world’s biggest travel market in two decades.
<snip>
Yields, or the revenue earned from a passenger for flying a kilometre, was 10.6 Singapore cents in the year ended March, dropping from 11.2 cents a year earlier. That damped full-year net income to S$804 million, or about a quarter of what Emirates racked up in the same period.
South-east Asia’s biggest airline by market value is facing increasing challenges to retain customers as the Middle East carriers expand more into the region and about a dozen low-fare offerings seek to win business on short-haul routes from Singapore to resorts like Bali and Phuket. To fight back, Chief Executive Officer Goh Choon Phong, 52, has ordered more than US$10 billion (S$13.7 billion){ of new aircraft and formed alliances from Australia to India as Asia is poised to become the world’s biggest travel market in two decades.
<snip>
My thoughts:
- Minor ramp down in meals (quality/quantity)
- Devaluation in award chart
- Unlikely they will discount heavily
Last edited by Kiwi Flyer; May 15, 2016 at 12:10 am Reason: edited for copyright, add link
#3
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#4
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#5
Join Date: May 2003
Location: Singapore
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Wonder what is happening on the other side of the ledger? Whilst yield may be down, surely so are costs with the lower fuel price. Or are hedges still making it difficult on the cost side as well?
#6
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#7
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Don't see why anyone is surprised by this. There's a younger generation in Singapore who happily choose to fly the ME3 and LCC's over SQ.
That leaves SQ reliant on a pool of loyal customers who are willing to pay a lot more for slightly better quality - 1) corporate expense customers and 2) older Singaporeans who will not travel on any other airline. The former is static and the latter is shrinking.
What SQ can do about it is more difficult. It's hard to fight demographics. They need new ideas, but history suggests this is very unlikely. Not surprising as the formula of Singapore Girl + modern fleet has worked for the last 40 years.
That leaves SQ reliant on a pool of loyal customers who are willing to pay a lot more for slightly better quality - 1) corporate expense customers and 2) older Singaporeans who will not travel on any other airline. The former is static and the latter is shrinking.
What SQ can do about it is more difficult. It's hard to fight demographics. They need new ideas, but history suggests this is very unlikely. Not surprising as the formula of Singapore Girl + modern fleet has worked for the last 40 years.
#8
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Not surprised, if they plan to charge, literally, 3-4x more in J, from Asia to Europe/North America/Pacific, compared to other similar (sometimes better) carriers. Sad to see the cuts, as I loved the SQ Suites offering. However, can't see myself spending that much on SQ, if I can get EY F Apartments for way less.
#9
Join Date: May 2003
Location: Singapore
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SQ has actually done OK with the onslaught - look at the basket cases that are TG & MH, and whilst CX seems to do very well, it has a natural geographic advantage bring traffic from North America to SE Asia and southern China and of course does not face the ME3 across the Pacific.
One wonders though eventually it may have to do a deal ala QF/EK with EY or QR. Then again hell might freeze over.
Last edited by lokijuh; May 14, 2016 at 5:02 am
#10
Join Date: Dec 2008
Location: Hong Kong
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You have a point about this being driven as much by the rise of competition, but I maintain that demographics is also a factor. 40-somethings are still much less likely to switch from SQ than 20-somethings.
#11
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#12
Original Poster
Join Date: Jan 2016
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He is known to be outspoken.. QR sleeping in bed with SQ will be out of convenience - and may be profitable in Long run. QR has good access to Europe and westwards which SQ can benefit from.
#13
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#15
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Yes I was having a bit of a laugh. Well at least with respect to QR. EY on the other hand you never know, if the yields keep falling for SQ .... EY have a different strategy to QR and EK, although granted their growth mechanism is also via equity rather than just flying big planes everywhere or alliances without equity.