Addendum
SIA to absorb full service SilkAir after upgrade
June 1st 2018
Four will become three. That’s the surprise news from Singapore Airlines which has announced Singapore Airlines (SIA) group subsidiary, SilkAir, will be absorbed into the flagship carrier’s operations after a $100 million upgrade. Read More » After the amalgamation, the group’s multi-brand strategy will be reduced to budget carrier, Tigerair, long-haul LCC Scoot and SIA itself.
While the news was unexpected it made sense. SIA has reported an impressive net profit of $665.2 million for the 2017-18 financial year, an increase of $397 million, or 148.1%, over the same period last year.
It also is undergoing an across the board transformation after a series of disappointing results in recent years. Merging SilkAir into SIA will bring significant efficiencies to the group and simplify the full-service end of its offerings.
The merger will take time. Upgrading the wholly owned subsidiary’s cabins with new lie-flat seats in Business Class and the installation of seat-back in-flight entertainment systems in both Business and Economy will not start until 2020 because of lead times in obtaining new seats and completing certification.
“Singapore Airlines is one year into our three-year Transformation Program and today’s announcement is a significant development that will provide more growth opportunities and prepare the group for an even stronger future,” said chief executive Goh Choon Phong.
“Importantly, it will be positive for our customers. It is another example of the major investment we are making to ensure our products and services continue to lead the industry across short, medium and long-haul routes.”
SilkAir operates 11 A320-family aircraft, 22 B737-800s and B737 MAX 8s. It is transitioning to an all-B737 fleet and flies to 49 destinations in 16 countries.
SIA’s strong financial results provides ample evidence its transformation is having an impact.
The parent airline’s operating profit improved from 2017 to $523.7 million in 2017-2018. Scoot’s operating income rose from $49.9 million to $57.4 million, SIA Cargo from $2.2 million to $110.2 million and SIA Engineering from $53.6 million to $56.6 million.
Only SilkAir reported a decline in operating profit, from $75.2 million to $32 million. SIA’s performance was boosted by the implementation of a revenue management system, a new airfare pricing structure and the establishment of a centralized pricing unit that increase revenues.
Costs were cut by more efficient operations that saved fuel and reduced waste, the carrier said.
A dedicated Customer Experience Division has been formed to sharpen the focus on the customer journey and delivery of more personalized services, SIA Group said.
