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Mr Huang Cheng Eng
Q: As the year winds to a close, could you describe what 2006 has been like for Singapore Airlines?
A: It has been a year of both good news and the not so positive. Good news first. We have recently launched our next generation aircraft cabin products which are set to redefine the premium air travel experience for all customers.
Associated with this is the delivery of our new Boeing 777-300ER aircraft that will allow us to grow capacity to meet with the strong travel demand.
Despite rising competition, Singapore Airlines continues to win accolades and bouquets from customers and industry observers alike, something that will serve to motivate us to deliver even more outstanding products and services in the next year and beyond.
On the not so positive, we suffered the third, and hopefully the last, episode of delays to the super jumbo A380, of which we are the launch customer. In addition, we continue to face high and volatile fuel prices which have become a big cost burden to the airline industry.
Q: What have the key highlights been? The pleasant surprises? Which markets over-delivered perhaps? The disappointments? What should have happened but didn’t?
The A380: Its repeated delay has been a disappointment for SIA.
Photo credit: Sim Kok Chwee.
A: Undoubtedly, the highlight of the year has to be the launch of our new range of cabin products in October. The new products are positively different from existing ones, offering customers in all classes significant improvements in their flying experience.
Surprises: Consistently strong customer demand across all key markets despite high energy prices, thus contributing to our strong performance and record revenues.
Disappointments: The repeated delay of the Airbus A380. We were looking forward to receiving the magnificent aircraft and putting it into service. We are disappointed, more so because the aircraft has demonstrated its technical capabilities time and again, only to be let down by production problems.
Q: The new cabin products are impressive. What was the thinking behind their design?
The new First Class bed: The airline wants you to feel at home in it.
Photo credit: Singapore Airline
It is the culmination of four years of hard work and long hours of many of my colleagues and customers. We are heartened that the initial response from our customers and the general public has been very positive.
The new cabin products are a long time coming; from the time we conducted the series of customer research, to the prototype testing, to the launch. Every single item has been intensely researched and continually modified so that they would represent a step change from existing products in the market.
Particularly for the First and Business Class seats which are the largest in the world, we had to make sure they fulfill, as far as it is commercially possible, customers’ every need and expectation.
Economy Class customers will also enjoy the most comfortable seats that are equipped with leading edge inflight entertainment and excellent inflight service.
Being Singapore Airlines, you can also be sure that our work on these new products, as well as the ones for the much-anticipated A380, will continue. We will live up to our commitment as the industry leader and bring back the romance of travel.
Q: Do you expect these products to set SIA apart significantly from the rest of the pack? Will they help raise yields on competitive routes?
A: Definitely. In fact that is our aim. We have been widely recognised as the industry trendsetter and these products are a testimony of that. They are priced slightly higher, on average, to reflect their superior quality, but nonetheless they remain competitive to what is currently offered in the market today.
Q: When will they be available on a wider basis?
The new Business Class - seat, bed and office in one.
A: All new SIA B777-300ER will feature our new cabin products. The first destination for the new aircraft will be Paris. After which, the new products will also be available on routes between Singapore and Hong Kong (December 2006), Milan and Barcelona (December 2006), Zurich (January 2007), Seoul and San Francisco (March 2007), and Frankfurt (May 2007).
Q: What will 2007 hold for, firstly, SIA and, secondly, the aviation industry in general?
A: Looking ahead, demand for air travel is expected to remain buoyant. However, as a result of delays in the Airbus A380 production programme, the first A380 aircraft will now be delivered in October 2007, with subsequent deliveries in 2008 and beyond. We are now working on plans to mitigate the impact of these delays on forward capacity growth.
Nonetheless, we will take delivery of the first of 19 Boeing 777-300ERs next month. By the end of March 2007, nine of these aircraft will be delivered, and three Boeing B747-400s de-commissioned. This will increase the operating fleet size to 94 passenger aircraft.
On the cost side, the decline in oil prices in recent weeks is a welcome respite from record highs. However, the price of jet fuel is still volatile and remains high. Geopolitical uncertainty could drive prices up again in coming months. We remain committed not only to profitability in the face of the high fuel cost environment but also to stay competitive. The recent reduction in fuel surcharge demonstrates this commitment.
Q: What are the biggest concerns or issues that keep you awake at night?
A: We have to keep looking at ways that will enable us to maintain our innovative edge and operate profitably in a highly competitive market.
Singapore Airlines, as well as other airlines, will continue to face the challenge of operating in a rather high fuel cost environment, with increased volatility.
We have other challenges. The introduction of two new aircraft types into the fleet in coming years – the B777-300ER, and the A380 – will be exciting, but will also require a lot of effort and coordination from people across the business – engineering, product innovation, in-flight services, and particularly for cabin and technical crew.
We are confident that our people will rise to these challenges, as they have done to many in recent years. They have an over-riding focus on our customers, and that keeps us all incredibly focused.
Q: Have low cost airlines dramatically changed the aviation landscape in Singapore, and in the rest of Asia? If so, how? How has SIA responded to these new entrants?
A: The so-called low cost airlines have made some impact in the market. Increasingly at the regional level, customers are finding themselves spoilt for choice.
However, we should keep the LCC threat in context. Their operations affect only about 10% of our revenue base. We certainly don’t ignore it, but we don’t blow it out of proportion.
In meeting with this competition, our measures have worked well, as evidenced by our ever-increasing passenger loads. This is because customers know that Singapore Airlines, with its vastly superior cabin products and extensive route network, also offers attractive fares.
Q: How do China and India figure in SIA’s overall strategy and business plan?
A: The contribution to revenue by the emerging markets of China and India remains positive and we continue to actively seek to look out for new route opportunities as well as review our existing operations to the two countries.
Q: Where does SIA see its biggest growth markets and opportunities coming from in 2007?
A: Singapore Airlines has a diverse global network which does not excessively rely on any one region. We will continue to have a balanced network. Expanding demand in China and India will continue to fuel growth in those areas, and we would hope to see that growth in demand matched by growth in access to, through and beyond those markets.
Some of our established markets, such as the South West Pacific (Australia and New Zealand) will continue to fuel strong growth in traffic through existing gateways.
And the non-stop services between Singapore and the US gateways will potentially open new traffic opportunities between South East Asia and the USA.
Notwithstanding the entry of new competitors, demand for intra-Asia services is high and we would expect this to continue.
Q: What is SIA’s role in terms of helping Singapore develop its inbound numbers? Specifically, how will SIA help Singapore meet its Tourism 2015 targets of doubling visitor arrivals and tripling tourism receipts?
A: Singapore Airlines is an active supporter of the government’s ongoing commitment to expand both the business and leisure travel market in Singapore.
With our advantageous geographical location, excellent air links with all the major markets in the world, as well as first class infrastructure in terms of top-rate accommodation and conference/meeting facilities, Singapore is ideally placed to tap into the growing tourism market, particularly in the MICE segment.
For instance, we have been working closely with the Singapore Tourism Board (STB) and other industry stakeholders to bring in key decision makers to Singapore on a regular basis to see for themselves what Singapore has to offer.
We work closely with the authorities like STB as well as local hotel partners, venue operators, conference and exhibition organizers and other industry members, and provide a seamless product at all trade shows in the MICE industry.
A specific example of our assistance is the provision of attractive fare packages. Our overseas sales offices also play an active role in the bidding process together with the other Singapore contingents to bring prestigious MICE events to our shores.
This approach has proved to be hugely successful judging from the increase in the number of high-profile events that have come to Singapore recently.
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