Singapore Airlines wants to be a budget carrier, too

When you think of Singapore Airlines, visions appear of cushy premium cabins, bespoke leather seats, and free-flowing Champagne poured by the carrier’s throwback “Singapore girls” flight attendants. It’s all that, yes. But the luxury carrier is working hard to diversify with budget airlines under its corporate banner. It owns low-cost carrier Scoot; 49% of Vistara, a joint venture in India with Tata Sons Ltd.; and NokScoot, a low-cost Thai airline Singapore owns in a joint venture with Nok Airlines. This collection of airlines—plus a new “ultra long range” Airbus A350 variant scheduled to arrive in 2018—enables Singapore to explore a range of expansion plans, many of which are currently focused on North America. It’s no coincidence that the region continues to be the runaway success story of airline profitability. It will provide roughly two-thirds of the industry’s projected $29b net income next year, according to estimates released Dec. 8 by the IATA. Singapore’s portfolio of carriers offers “a lot more nimbleness and flexibility in addressing the needs of the markets,” CEO Goh Choon Phong said Dec. 6 in New York. Last month, Singapore reported a 70% drop in net income and warned that 2017 could be challenging as well. The airline has struggled amid the expansion of low-cost carriers in its home region, and moves by a trio of Middle East-based full-service airlines to encroach on its core franchise of premium business travelers. “It’s not going to be business as usual,” said Goh. “These are structural changes; these are changes that are not going to go away.” Into this environment, the CEO has prescribed a diversification of revenue, a renewed focus on cabin comforts for big spenders, and new markets. A chief pillar of the company’s expansion rests on further long-haul expansion, driven by firm orders for 67 new Airbus A350s and 30 of Boeing Co.’s largest 787 variant, the -10. “We have called it a game changer for us and there’s a reason for that,” Goh said, alluding to the growth opportunities the A350 affords. With these new, more fuel-efficient planes, Singapore executives have been keen to resume the nonstop flights from the city state to New York and Los Angeles, which operated for nine years before ending in 2013 because of the route’s extreme fuel costs. The airline is also considering the potential for new US destinations, having for years studied traffic flows in places like Boston, Chicago, and Miami, Goh said. <br/>