SIA implements big multi-brand strategy overhaul
Fighting back against the rapid rise of the Gulf carriers and low-cost Asian competitors, Singapore Airlines is implementing a massive multi-brand strategy overhaul to bring back growth.
This means getting involved in the low-cost segment, expanding its regional network and cutting costs – including terminating its 76 foreign pilots’ fixed-term contracts. The latter move is a dangerous one as it potentially allows these experienced personnel to leave to work for SIA’s competitors.
Promotional fares offered by SIA on its primary long-haul routes have boosted traffic, but yields remain under pressure. Premium-class travel makes up 40% of the airline’s revenue, but this has been hit by cuts in the budgets of corporate clients. Keeping premium is crucial to the airline’s survival.
Revenues rose slightly in the year to March 2012, but profit dropped by nearly 70%. This week, SIA is expected to post a 22% rise in net profit to SGD$409.6 million (US$330 million) for the year ending March, according to Reuters analyst forecasts.