24left

Bloomberg - June 6, 2017

Singapore Airlines Says Job Cuts Are Possible in Business Review

by Benjamin D Katz and Abhishek Vishnoi

https://www.bloomberg.com/news/artic...usiness-review


The Straits Times - June 7, 2017

Singapore Airlines CEO signals job cuts loom in business review

http://www.straitstimes.com/business...usiness-review


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Mods- feel free to move/delete

SQveteran

Yes, the unfortunate reality is that if revenue targets are not met, reduction in cost becomes necessary. I am sure the “wide ranging review” will look closely at staffing levels, routes, competition, loyalty / mileage programs etc. They would do well to survey Krisflyer members, other current customers and importantly customers they have lost.

SQ predicts a challenging 2017, with passenger and cargo yields - a key measure of profitability in the industry - under stress. Meanwhile across the causeway Air Asia’s Q1 revenue increased 31%, its load factor grew 3% to 89% and during the quarter, it added six planes, bringing its total fleet size to 176 aircraft and plans to add a further 29 aircraft.

SQ can turn this around. Business travelers have little interest in flying low cost carriers; they want comfort and need seamless network connections. If anything SQ needs to enhance its value proposition by moving its full service offering further up-market whilst ensuring its airfares are reasonable. It also needs to re-invent its Krisflyer program

jjjohn

poor management is another factor.
sia didn't react and respond to rapid change and development timely and rightly.

spk307

They realised very late that the old hub and spoke model might not grow much - people are moving to either Low cost or premium non stop. SQ needs to get out of economy and also invest more in Scoot.

terbangalways

Nowadays companies are reducing costs. Business travellers rarely have our voices over our preferences.
Premium corporate travellers fly ME3 rather than SQ.

I have seen very reasonable long haul premium fares. But still can't beat those offered by QR.

Plus deteriorating inflight service, poor J seats cubby foot rest, over crowded lounge in SIN. SQ in need to revamp fast!

YOWisHome

I have a few co workers that live in Singapore and have switched over to EVA. SQ does nothing for upgrades and has no Value proposition for those flyers who do 75K or over 100K of miles. So they will go to EVA and enjoy some upgrades and better fare options.

edgewood49

I am so sure that "poor" management is a factor. they have been one of the better managed airlines throughout. I think the changing climate of international travel is mostly to attribute this too. True there has been a lot of ramping up of flights and larger birds but that was to be expected.

Air travel is becoming less and less appealing and "fun" as it use to be. Terrorism and all that it has brought to our society, crowded planes, crews flying long hours has led to a loss of decorum. I travel over 100K domestic alone for work and it's becoming " full contact"

KACommuter

I disagree. The hub and spoke model is growing really fast in places like Dubai.

And whilst Scoot may indeed benefit from growth in low cost, premium non-stop is the problem for SQ i.e. there isn't enough of it. Their issue is a growing market for switching from premium non-stop to one stop if the time penalty is small and the fare gap is large - hence ME3's success.

24left

I agree.

Based on their seeming successes, the ME3 - EK in particular - are doing well with routing pax through their ME hubs. I think this is partly because they can offer excellent F and J experiences that people are willing to pay for and at the same time, fill "the back of the bus" with very competitive fares for people transiting to India, Sri Lanka or elsewhere.

I hope that SIA can figure out the right model for the specific customers they are after in the premium category or they might eventually end up with a similar challenge that CX is having. Yes, different market, routes and demographics, but premium pax are still lucrative if you can fill the premium cabins with them - on paid fares.

KACommuter

They can't price up, so they need to cut costs. All organisations that are successful for a prolonged period usually get fat as they recruit more and more people and create more managerial positions, often with relatively narrow work scope. So I suspect one way to improve is to eliminate a lot of these positions i.e. cut SG&A at HQ. That restores EBITDA headroom and gives the flexibility to reduce pricing, stimulate demand e.g. by narrowing the gap with one-stop premium, and win back business that has drifted elsewhere.

They also need to rejuvenate the product, but I can't see this as the main driver of a return to competitiveness as their lead over competing products is nearly zero by now.

24left

I understand and you're right, but in any company when even mild panic sets in, poor decisions are often the result.

They have different products competing in different regions on different routes with 2 distinct groups of customers - the premium and the LCCer

While I was rather impressed with the service and food on all of my SQ flights, they were all J regional for approx 5 hours or so. One was on the 380. I found the interiors in need of a major refresh (same with CX BTW).

The challenges are still going to be how to stop losing some premium customers to the ME3 on competing routes, how to stop losing some premium customers regionally and how best to utilize the LCCs so the competitors don't take more market share.

While LH, QF and AC (as examples) have been relatively successful with their secondary divisions, they fly in different marketplaces.

And then there is China and the endless stream of new airlines, which is causing almost all legacy and well-established carriers to have a spasm.

And things aren't so smooth at the ME3 either.

lokijuh

And Doha!

I think one of the problems with the hub and spoke model at SIN, is just the geographic location of SIN. It's a sensible hub for travelling to/from Australia or Indonesia. It seems to work for Southern India to West Coast US, or East Asia - JNB. But other routes are fare less direct travelling via SIN.

Perhaps SQ also copes better with higher fuel prices. The lower fuel prices have opened up many non-stop routes, that may be more marginal if (when) fuel prices rise again, and the pendulum could swing back to favouring hubs.

spk307

Do you have trouble getting out of the past? We are talking about current trends, not the trends of last 20 years.

Emirates is cutting flights. Qatar is removing amenities and trimming their lounges. Hub and spoke model was the king for last 20 years, but growth is bare minimum now.

If you need help to identify current trends, look at the new flight routes being proposed; look at the airplane models that get massive orders!

Its either short haul single aisle or ultra long range.

Just take flight routes from China to US. As per Wikipedia,

In 2006, there were 10 non-stop flights between the two countries 2 million passenger trips per year.

As of 2013, there are 28 non-stop routes (not including Hong Kong), operated by three major US carriers, United, American and Delta, and four Chinese carriers, Air China, China Eastern, China Southern and Hainan Airlines. By 2014, there will be 35 non-stop routes.

Even Qingdao has a non stop flight to SFO. Earlier the same would have been through HKG. No wonder Cathay is in same situation as SQ. The China traffic has dried up for Cathay and to a smaller extent for SQ.

edgewood49

It's my opinion that given the current and going forward these carriers need to add a premium coach product, it works and bridges that huge gap between main cabin and the upper classes which are getting ridiculous as breakfast in Paris. We have what maybe our last upper class flights on EK and BA after that I think premium coach is in our future.

24left

Interesting comments in this short PPRuNe thread about the EU and airline competition (not the Reuters article)

http://www.pprune.org/rumours-news/5...mpetition.html