SIA to form long-haul low-cost subsidiary

By Siva Govindasamy

Singapore Airlines (SIA) plans to establish a no-frills low-fare subsidiary that will serve medium and long-haul routes using widebodies.
Operations at the Singapore-based wholly-owned subsidiary will begin within a year, and it will be managed separately from SIA, said the Star Alliance carrier.
"The new airline is being established following extensive review and analysis. It will enable the SIA Group to serve a largely untapped new market and cater to the growing demand among consumers for low-fare travel," added the airline.
This is the airline's first major decision under new CEO Goh Choon Phong, who took over the reins at SIA on 1 January and has largely kept a low profile while reviewing the carrier's medium to long-term strategy.
"We are seeing a new market segment being created and this will provide another growth opportunity for the SIA Group," he said. "As we have observed on short-haul routes within Asia, low-fare airlines help stimulate demand for travel, and we expect this will also prove true for longer flights."
The company remains committed to its flagship airline's premium model, and this new subsidiary will supplement the existing businesses, he added. "We remain fully committed to the further growth of SIA, which will continue to offer the highest-quality products and services to our customers."
Kuala Lumpur-based AirAsia X, in which Malaysian low-cost carrier AirAsia has a 16% stake, pioneered the long-haul low-cost model in Southeast Asia and has gradually grown since it began operations in November 2007. Its network now includes London, Paris, Tehran, Gold Coast, Melbourne, Christchurch, New Delhi, Mumbai, Chengdu, Tianjin, Hangzhou, Taipei, Seoul, Tokyo and Perth.
From Singapore, Qantas associate Jetstar Asia flies Airbus A330s long-haul to Melbourne and Auckland. It also plans to offer services to Japan and points in Europe in the near term.
Details related to the new airline's branding, products and services, and route network will be announced by its management team "in due course", said SIA.
Aircraft will initially be sourced from the parent carrier, which has 20 Boeing 787-9s and 20 Airbus A350-900s on order. SIA's spokesman said that subsequently, "all options are open on aircraft sourcing".
He added that there could be routes on which both the parent airline and the new subsidiary could operate on, although this will be decided by the management team.
SIA's regional airline SilkAir will retain its business model, he said. "SilkAir is a network carrier while this subsidiary will have a point-to-point model," he added.

http://www.flightglobal.com/articles/2011/05/25/357171/sia-to-form-long-haul-low-cost-subsidiary.html

Singapore Air to set up low-fare long-haul carrier

Wed May 25, 2011 7:42am EDT

* New carrier to operate within one year
* To use wide-body planes for medium, long haul
* Move comes as competition increases from budget airlines
* AirAsia boss dismisses threat from new carrier
(Adds AirAsia chief executive)

By Harry Suhartono and Charmian Kok
SINGAPORE, May 25 (Reuters) - Singapore Airlines (SIAL.SI), the world's second-most valuable listed airline, set out plans to enter the long-haul budget carrier market by setting up a new subsidiary expected to compete with AirAsia X.
The premium carrier faces competition from other players in Asia and the Middle East that cater to high-end passengers as well as fast-expanding budget airlines in Asia.
Wednesday's move by Singapore Airlines' new Chief Executive Officer Goh Choon Phong marks a major reversal from his predecessor's strategy.
"This is driven by the changing landscape in the industry. If you look at what's happening (in Malaysia), AirAsia X has really made leaps and bounds in terms of their operations," an aviation analyst at Standard & Poor's, Shukor Yusof, said.
"It's a new direction and it's been driven by a need for them to grow within the market," he said.
Singapore has built its reputation on high-quality cabin service.
Goh's predecessor Chew Choon Seng had questioned whether the budget carrier strategy could be successfully applied to long-haul routes, noting that passengers on 13-hour flights would expect to be served meals and enjoy some degree of comfort and entertainment.
"As we have observed on short-haul routes within Asia, low-fare airlines help stimulate demand for travel, and we expect this will also prove true for longer flights," said Goh, who has been in the top job for about six months.
The carrier controls about a third of Singapore-based budget carrier Tiger Airways (TAHL.SI), which mostly operates on short-haul routes, and owns regional carrier SilkAir.
AirAsia X is the long-haul budget carrier unit of Malaysia's AirAsia (AIRA.KL).
AirAsia Chief Executive Tony Fernandes dismissed the new threat.
"Not worried. They should be worried. Their p and l (profit and loss statemwent) going to hurt. Business(es) should stick to what they know best," he said on Twitter.
Fernandes is in the midst of negotiating a major deal with Airbus (EAD.PA) that could include more long-haul A330 passenger jets for AirAsia X as well as medium-haul A320neo aircraft.
Singapore Airlines, 55 percent owned by state investor Temasek Holdings [TEM.UL], had said near-term weakness in load factors and high fuel prices are the top threats for the carrier and will affect its operating performance.

http://www.reuters.com/article/2011/05/25/singaporeairlines-idUSL3E7GP1HE20110525

Airbus A380: how the airlines compare

With Korean Air soon to become the sixth carrier to operate the Airbus superjumbo, Business Traveller and seatplans.com examine the different A380 layouts offered by SIA, Emirates, Qantas, Air France, Lufthansa and Korean.

http://www.businesstraveller.com/news/airbus-a380-the-layouts

Air Cargo And The Logistics & Transportation Industry

How the new DOT airline rules will benefit you

Last week, the Department of Transportation issued a sweeping new set of rules expanding the situations in which airlines must provide compensation to fliers and requiring greater disclosure of fees and taxes.

• NEW RULES: Airlines must pay for lost bags, bumped flights

Here's a look at how the new rules will affect you, and my response to them:

1. Refund of bag fees if luggage is lost 

This is an absolute no-brainer and it's too bad the airlines had to be regulated into doing this. If you send something by FedEx and it's an hour late past the promised delivery time, you get a refund no questions asked. Disappointed that the rule doesn't include delayed bags — just lost ones.

2. Full disclosure of all fees on websites 

If you know where to look, most airlines have already done this, but the fees aren't all on one easy-to-find page. Ryanair in Europe actually has had this for years with a link showing all its fees clearly spelled out. U.S. airlines need to do this too. It will lead to better customer relations. All fees, including frequent-flier fees, bags, online booking, changes, pets, infants and whatever else should be clearly organized in one place. Whether they should be displayed at check-in counters is another matter — that would be a pretty big sign.

• AIRLINE FEES: What you'll pay for bags, ticket changes, etc.

3. Involuntary bumping payment increased  

Even $1,300, the new maximum, won't compensate someone who missed a $10,000 cruise, or forfeited a $5,000 vacation and missed two days of work plus other expenses. I would rather have seen some mechanism for passengers who incur enormous financial loss because of a bump situation to get compensated fairly. The good news is that relatively few passengers are involuntarily bumped each year (about 65,000 in 2010).

4. Tarmac delay rule extended to international flights 

Good idea, overdue. Airlines and airports are getting their act together and developing strategies to offload those passengers who wish to return to the terminal in the event of long tarmac delays. Remember, the rule does not say a flight has to be canceled. Just that you have to allow whoever wishes to return to the terminal the chance to do so.

5. Requiring taxes to be shown in all advertised fares 

This one seems unfair to me. Should restaurants now add the meal and or sales tax to all menu prices? Should the local electronics retailer include sales tax on their television ad prices? Hotels? Rental car companies? Why are airlines being singled out? We do think that any fare that requires a round-trip purchase be listed in ads only as a round-trip fare. But requiring taxes to be listed is discriminatory and will be a nightmare for the airlines (especially since some taxes vary depending on connecting city and routing).

6. What should have been in the new rules 

The list left off one regulation we need: compensation for schedule changes made long after you bought your ticket.

You buy a ticket in April; in October the airline tells you they don't fly that route anymore, but you can buy a new fare on another airline for three times the price or get your money back. No. The original airline should put you on the alternate airline at the same price you paid. Or perhaps you bought a nonstop flight, but the airline switches you to one making two connections at the same fare. No. A hamburger is not the same as filet mignon.

Another scenario: Your airline used to fly daily from a city, but service is reduced to 3 times a week. Five months after buying your fare and making land arrangements that are non-refundable, you have to buy two nights hotel at your own expense to wait out the next departure home. No. The airline should pay for the hotel.

Fliers, what did the new DOT rules get right, and what else do you wish was covered? Sound off in comments below.

Read previous columns

George Hobica is the founder of Airfarewatchdog.com. Airfarewatchdog features the best airfares on thousands of routes verified by a team of expert fare analysts.

http://travel.usatoday.com/experts/hobica/story/2011/04/How-the-new-DOT-airline-rules-will-benefit-you/46575920/1?sms_ss=twitter&at_xt=4db9c0fd5104a480,0