Singapore Airlines Says Job Cuts Are Possible
#1
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Singapore Airlines Says Job Cuts Are Possible
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
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
----
Mods- feel free to move/delete
#2
Join Date: Aug 2005
Programs: SQ [TPP 20]
Posts: 124
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
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
#4
Join Date: Jan 2016
Location: Singapore
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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.
#5
Join Date: Mar 2017
Posts: 595
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
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!
#6
Join Date: Oct 2014
Location: Ottawa
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Posts: 76
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.
#7
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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"
#8
Join Date: Dec 2008
Location: Hong Kong
Programs: CX DM
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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.
#9
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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.
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.
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.
#10
Join Date: Dec 2008
Location: Hong Kong
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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.
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.
#11
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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.
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.
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.
#12
Join Date: May 2003
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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.
#13
Join Date: Jan 2016
Location: Singapore
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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.
Last edited by spk307; Jun 10, 2017 at 5:01 am Reason: correction
#14
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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.
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.
#15
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Speaking of hub and spoke and ME3....
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
http://www.pprune.org/rumours-news/5...mpetition.html