Singapore Airlines launches new products worth S$500m

By Devi M. Asmarani

SINGAPORE (JP): Singapore Airlines (SIA) launched here on Friday S$500 million (US$300 million) worth of new products and upgraded in-flight services in a bid to stay atop in the international airlines competition, despite a downturn in revenue this year.

The new products include a complete makeover of the airline's two Boeing Megatop 747 aircraft and other new service features such as a luxurious first-class check-in reception area at Singapore's Changi Airport.

SIA's deputy chairman and chief executive officer Cheong Choong Kong said the new products were the company's way of maintaining its market share in the global carriers market, although the region's monetary crisis had taken a significant bite out of its revenue.

"SIA competes with major players all over the globe and many of these based in Europe and America are in the pink of health," Cheong told some 150 worldwide reporters at the launching of the products.

"The economic crisis affects mainly the Asian carriers, and we have to compete with carriers from all over the world. Therefore we can't let the crisis prevailing here at the moment prevent us from upgrading our products," he said.

So far, only two aircraft, which will start flying on Sept. 23 to London, have been converted into the new model but the company plans to have all its 37 Megatop aircraft converted by the end of next year, Cheong said.

As part of the remodeling, the company has reduced the seats in first class to 12 from 16 seats, and those in Raffles business class to 58 from 65 to provide more room.

The remodeling also involves upgrading the seats in the cabin area, which includes the installment of new luxurious and more spacious seats in both first and business classes; new in-flight serviceware; improvement of the sophisticated entertainment and information system; and better meal service and champagne throughout flights in all of the airline's economy class sections.

The lavish product launch comes at a time when most air carriers across the region have to bear the brunt of the economic turmoil, which has seen a significant downturn in revenues while expenses have soared.

Many airlines in the region have begun implementing stringent cost-cutting measures, and at least one, Indonesia's Sempati Air, shut down after its financial problems worsened.

Cheong said SIA was no less affected by the crisis, and the company had taken steps to prevent a further downturn.

This includes deferring the contract for 11 aircraft over the next two years, the redeployment of some of its planes from the distressed Asian market to the less tumultuous European and Australasian routes.

A large part of the company's workforce voluntarily agreed to forego wage increments this year, including top executives, managerial staff and the company's unionists which make up 40 percent to 50 percent of its workers.

"We will accept a much lower growth rate than is characteristic of SIA this year, and are prepared even to bring that rate down to zero if necessary," he said.

He admitted that the airline's profits would likely erode considerably, but ruled out possibilities that the company would end the financial year with a loss.

However, Cheong said the company would not cancel or delay its expansion program for the next couple of years, including plans to acquire stakes in several international airlines.

Singapore Airlines has announced joint bids with Germany's Lufthansa for a significant stake in both Thai Air and South African Airways, Cheong said, adding that prospects for both plans would not be announced until next year.

"We must expand our global reach by entering into alliances with suitable partners, otherwise we shall be left behind by the competition, no matter how good our product," he said.

As of March 31, 1998, SIA had total assets of S$15,707 million. Its after tax profit reached S$1,034.7 million and its revenue S$7,724 million in the 1997/1998 financial year.

The airline currently operates 88 aircraft comprising 37 B747- 400, four B747-300, six B747-400, 10 B777-200, 13 Airbus A340- 300, 17 310-300 and one A310-200.

It covers 76 destinations in 40 countries, while its subsidiary, SilkAir, serves 21 destinations in eight Asian countries.