SIA set to get new rivals

SIA set to get new rivals

Agence France-Presse, Singapore

The Singapore government on Friday announced the establishment of a committee to allocate air traffic rights, clearing the way for the entry of new domestic carriers to compete with Singapore Airlines (SIA).

The Ministry of Transport said the setting up of the air traffic rights committee (ATRC) was in line with practices in other countries with more than one airline.

"Singapore has set up an air traffic rights committee to allocate the government's air traffic rights amongst Singapore carriers," the ministry said in a statement.

"The establishment of the committee will pave the way for the potential entry of new Singapore carriers," it said.

Singapore's air traffic rights have been used solely by SIA, which also operates a regional wing, SilkAir.

With the potential entry of new Singapore-registered carriers, the committee was set up to "allocate Singapore's air traffic rights in a manner that maximizes both the interests of Singapore as a nation as well as the benefits to the public," the statement said.

In July, Valuair, a budget carrier set up by a former SIA executive, applied for a license to provide commercial flights out of the city-state.

The Civil Aviation Authority of Singapore has asked Valueair to provide more information on the aircraft it will be using as well as maintenance and general support programs.

It will take six to nine months after all documents have been submitted to evaluate the application.

ValuAir was registered as a limited company by former SIA managing director Lim Chin Beng in March.

SIA, majority-owned by the Singapore government, has said it will make a decision by the end of the year on whether to set up a no-frills carrier.

It has appointed a task force to look into the rationale of setting up a low-cost outfit given the potential challenge from Valueair and Malaysian budget carrier AirAsia which plans to set up a hub in Johor near the border with Singapore.

SIA previously said it was prepared to convert SilkAir quickly into a budget carrier to meet any competition for its markets.

The air traffic rights committee will be headed by the permanent secretary of the transport ministry and will have senior representatives from various government agencies.

All new rights will have a validity of up to five years.

In a concession to SIA's role in building Singapore into a regional aviation hub, the SIA Group will retain its existing air traffic rights under a 10-year license which will be renewed for a five-year period after expiry.