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326 replies to this topic

#1 Sharil Abdul Rahman

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Posted 25 May 2011 - 05:38 PM

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_E5E8CD7EC0BE86D54825789B002F518E/$file/NE-1211.pdf?openelement

just saw this news on my twitter list.

thoughts anyone>?

#2 KC Sim

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Posted 25 May 2011 - 05:46 PM

This just has to happen ... with news of AirAsia (or AirAsiaX) and Qantas all eyeing a foothold in Singapore!

What we now know is that this new subsidiary airline :

- will be operating wide-body aircraft
- will be operating on medium- and long-haul routes
- will have a different corporate branding from SIA and be managed independently
- will be operational within a year

This is probably the most exciting new for Singapore-based aviation enthusiasts in a very very long time. And I suspect that some of the less well-performing destinations in the current SIA network may be off-loaded to this subsidiary, along with new destinations. Perhaps destinatins such as Athens may be served by this new airline and I am hoping for Honolulu to come online ... just a wish but who knows?

And I hope that the livery is something far more exciting than that of boring SilkAir!

KC Sim

#3 flee

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Posted 25 May 2011 - 05:55 PM

Yes it would appear to be a defensive move. With ANA setting up PEACH and MAS with Firefly, it would appear that legacy airlines do need to have an LCC subsidiary.

What will happen to Tiger Airways? How will they have to reposition themselves? I hope they will also give us some interesting and fresh liveries, just like AirAsia is entertaining us with their different colour schemes...

Very interesting times indeed.

#4 KC Sim

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Posted 25 May 2011 - 06:04 PM

No conflict with Tiger Airways here.

The new subsidiary will be a medium- and long-haul LCC (just like AirAsia X).

KC Sim

#5 JingKai Seah

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Posted 25 May 2011 - 06:51 PM

No conflict with Tiger Airways here.

The new subsidiary will be a medium- and long-haul LCC (just like AirAsia X).

KC Sim


Hmm.. i believe its not 100% true there will be no conflict.. because Tiger Airways does ply certain medium/long haul routes? Taipei for instance?

#6 KC Sim

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Posted 25 May 2011 - 07:06 PM

I think Taipei will continue to be an SIA destination and not one that will be relinquished to this new carrier.

There are tonnes of other destinations that don't include the very few that the incumbent LCC operate to. Frankly, even if this new LCC operates to Taipei, would you rather fly on the widebody aircraft of this new airline or the A320s of Tiger Airways and Jetstar Asia Airways? And with the bigger capacity, do you think Tiger / Jetstar Asia could compete on low costs on the same sector?

Taipei is not a route that anybody in the right frame of mind would go into now (if you do not already have a foothold there) ... to begin with, it always has been a low-yield destination. Secondly, there will be a total of six airlines operating on this route by 1 July 2011 - China Airlines, EVA Airways Corporation, Jetstar Asia Airways, Singapore Airlines, Tiger Airways, TransAsia Airways.

There are loads of Indian destinations - Ahmedabad and Amritsar among them along with those in the middle east (such as Amman, Teheran, Beirut), in Europe and perhaps even as far away as Honolulu.

If there is any competition with Tiger or Jetstar Asia, it will be minimal but given the widebody aircraft that this new airline will operate, those operating narrow bodied aircraft on sectors in excess of 3 hours stand to lose their edge.

KC Sim

#7 Waiping

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Posted 25 May 2011 - 08:04 PM

Quite surprising since people here, or in bki at least, are nuts about going Taipei. Can't even book.cheap fare on AK right now.

#8 flee

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Posted 25 May 2011 - 09:08 PM

Latest Update from Reuters

* New carrier to operate within one year

* To use wide-body planes for medium, long haul

* Move comes as competition increases from budget airlines

* AirAsia boss dismisses threat from new carrier

(Adds AirAsia chief executive)

By Harry Suhartono and Charmian Kok

SINGAPORE, May 25 (Reuters) - Singapore Airlines (SIAL.SI), the world's second-most valuable listed airline, set out plans to enter the long-haul budget carrier market by setting up a new subsidiary expected to compete with AirAsia X.

The premium carrier faces competition from other players in Asia and the Middle East that cater to high-end passengers as well as fast-expanding budget airlines in Asia.

Wednesday's move by Singapore Airlines' new Chief Executive Officer Goh Choon Phong marks a major reversal from his predecessor's strategy.

"This is driven by the changing landscape in the industry. If you look at what's happening (in Malaysia), AirAsia X has really made leaps and bounds in terms of their operations," an aviation analyst at Standard & Poor's, Shukor Yusof, said.

"It's a new direction and it's been driven by a need for them to grow within the market," he said.

Singapore has built its reputation on high-quality cabin service.

Goh's predecessor Chew Choon Seng had questioned whether the budget carrier strategy could be successfully applied to long-haul routes, noting that passengers on 13-hour flights would expect to be served meals and enjoy some degree of comfort and entertainment.

"As we have observed on short-haul routes within Asia, low-fare airlines help stimulate demand for travel, and we expect this will also prove true for longer flights," said Goh, who has been in the top job for about six months.

The carrier controls about a third of Singapore-based budget carrier Tiger Airways (TAHL.SI), which mostly operates on short-haul routes, and owns regional carrier SilkAir.

AirAsia X is the long-haul budget carrier unit of Malaysia's AirAsia (AIRA.KL).

AirAsia Chief Executive Tony Fernandes dismissed the new threat.

"Not worried. They should be worried. Their p and l (profit and loss statemwent) going to hurt. Business(es) should stick to what they know best," he said on Twitter.

Fernandes is in the midst of negotiating a major deal with Airbus (EAD.PA) that could include more long-haul A330 passenger jets for AirAsia X as well as medium-haul A320neo aircraft.

Singapore Airlines, 55 percent owned by state investor Temasek Holdings [TEM.UL], had said near-term weakness in load factors and high fuel prices are the top threats for the carrier and will affect its operating performance. [ID:nL3E7GA14S] (Additional reporting by Tim Hepher; Editing by David Cowell)

#9 flee

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Posted 25 May 2011 - 09:54 PM

Tony Fernandes says he is not worried about this competition. However, AirAsia X's CEO, Azran Osman Rani is more grounded. He is concerned that AirAsia X will not be able to compete as effectively if the Malaysian govt. continues to protect MAS.

This is a valid concern - MAS has already lost to SIA. Will AirAsia X also lose to SQ's new LCC because the Malaysian govt. messed things up for them?

Another media report:

SIA to form long-haul low-cost subsidiary
Singapore Airlines (SIA) plans to establish a no-frills low-fare subsidiary that will serve medium and long-haul routes using widebodies.

Operations at the Singapore-based wholly-owned subsidiary will begin within a year, and it will be managed separately from SIA, said the Star Alliance carrier.

"The new airline is being established following extensive review and analysis. It will enable the SIA Group to serve a largely untapped new market and cater to the growing demand among consumers for low-fare travel," added the airline.

This is the airline's first major decision under new CEO Goh Choon Phong, who took over the reins at SIA on 1 January and has largely kept a low profile while reviewing the carrier's medium to long-term strategy.

"We are seeing a new market segment being created and this will provide another growth opportunity for the SIA Group," he said. "As we have observed on short-haul routes within Asia, low-fare airlines help stimulate demand for travel, and we expect this will also prove true for longer flights."

The company remains committed to its flagship airline's premium model, and this new subsidiary will supplement the existing businesses, he added. "We remain fully committed to the further growth of SIA, which will continue to offer the highest-quality products and services to our customers."

Kuala Lumpur-based AirAsia X, in which Malaysian low-cost carrier AirAsia has a 16% stake, pioneered the long-haul low-cost model in Southeast Asia and has gradually grown since it began operations in November 2007. Its network now includes London, Paris, Tehran, Gold Coast, Melbourne, Christchurch, New Delhi, Mumbai, Chengdu, Tianjin, Hangzhou, Taipei, Seoul, Tokyo and Perth.

From Singapore, Qantas associate Jetstar Asia flies Airbus A330s long-haul to Melbourne and Auckland. It also plans to offer services to Japan and points in Europe in the near term.

Details related to the new airline's branding, products and services, and route network will be announced by its management team "in due course", said SIA.

Aircraft will initially be sourced from the parent carrier, which has 20 Boeing 787-9s and 20 Airbus A350-900s on order. SIA's spokesman said that subsequently, "all options are open on aircraft sourcing".

He added that there could be routes on which both the parent airline and the new subsidiary could operate on, although this will be decided by the management team.

SIA's regional airline SilkAir will retain its business model, he said. "SilkAir is a network carrier while this subsidiary will have a point-to-point model," he added.

Source: http://www.flightglo...subsidiary.html

Edited by flee, 25 May 2011 - 09:56 PM.


#10 Raymund Yeoh

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Posted 25 May 2011 - 10:01 PM

Quite surprising since people here, or in bki at least, are nuts about going Taipei. Can't even book.cheap fare on AK right now.


I did not know bki folks are nuts bout Taipei.....what does Taipei have that attracts so many bki folks......I go there monthly n find it boring....

#11 Kee Hooi Yen

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Posted 25 May 2011 - 10:11 PM

not only a threat to AK & D7 but also to KLIA's LCCT as a leading hub for budget airlines

#12 Isaac

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Posted 25 May 2011 - 11:42 PM

Quite surprising since people here, or in bki at least, are nuts about going Taipei. Can't even book.cheap fare on AK right now.

Spot on ! MAS is always so expensive and never really bothers to offer any cheap seats to TPE as i hear their BKI/TPE loads are quite good. AK is enjoying a pretty good load for their BKI/TPE flights too.


* New carrier to operate within one year

* To use wide-body planes for medium, long haul

May be the new SQ long-haul LCC arm will use 772 initially ... with 10-abreast in EY ...

Edited by Isaac, 25 May 2011 - 11:43 PM.


#13 V Wong

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Posted 26 May 2011 - 12:45 AM

AirAsia Chief Executive Tony Fernandes dismissed the new threat.

"Not worried. They should be worried. Their p and l (profit and loss statemwent) going to hurt. Business(es) should stick to what they know best," he said on Twitter.


Has he forgotten that those that gave negative remarks about AirAsia during its early days of formation had to eat their humble pie now? Did he have a lot of experience with LCC model in the beginning? Much as I admire his abilities, sometimes, this man is as double standard and fake as can be...especially when it comes to competition.

#14 Pieter C.

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Posted 26 May 2011 - 03:47 AM

South-East Asia is becoming more and more interesting for aircraft-spotters !!! :good:

MH, TG and now even SQ will form their own LCC's... :yahoo:

More competition is lower fares... :pardon:

#15 Mohd Azizul Ramli

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Posted 26 May 2011 - 07:56 AM

My views on this matter, pros and conts:

- This airline being based in Singapore and (will be) managed SQ's style will likely be a solid business set up with healthy and supportive environment for it to grow. The Singapore government has shown that they do not interfere with and dictate airlines business as much as the Malaysian government is doing.

- Pressure will be on D7 to maintain its market leadership, as this new airline will unlikely face the problems that D7 are having - tight and very controlled allocation of routes (in favour of MH) and space limitation to handle aircrafts at its hub (no more space at KUL LCCT and the delayed KLIA2).

- I hope the Malaysian government will take a very serious note on this development. Their grip on MH has led the airline to its current destitute state when compared to SQ. It will be a tremendous (pride) loss for Malaysians if the same fate is waiting D7 as well, since the foundation that could lead to its failure in maintaining its quantum leap in this particular market segment has been exhibited by the freak controlling government.

- However, being based in Singapore might not make wonders for this new set up either. To put it bluntly, Singapore is not a big 'budget' destination when compared to Malaysia. Even after all these years, AK still maintain its market leadership over Tiger by a significant margin so the same could applies to D7 versus this new set up. Oasis failed in Hong Kong, a long haul LCC established in a rather identical market/socio economic as Singapore. This airline will have a competitor from the same market segment in its hub when Jetstar starts its long haul operation from SIN, while D7 continues a monopoly out of KUL. The success of SQ is very much because of the airline's position in getting huge business from transit passengers especially on the Kangaroo route. For this new airline to emulate the same formula might put a pressure on its cost and all these connecting passengers issue is not in the LCC business 101. This airline does not have direct LCC feeders that D7 is having with AK/FD/QZ too. Based on the info so far, it is undetermined whether MI will feed this airline nor it will share the same sales platform (in this case a website) with Tiger for it to have an effective feed channels from its sister companies (MI and Tiger is owned/partly owned by SQ) that are plying the regional routes for the group.

#16 flee

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Posted 26 May 2011 - 10:17 AM

PETALING JAYA: Singapore Airlines (SIA) has surprised the aviation industry by announcing plans to set up a wholly-owned low-cost carrier that will ply medium and long-haul routes in a year's time.

SIA said it had intentions to set up a new no-frills low-fare airline operating wide-body aircraft which will be operated independently and managed separately from SIA.

The Singapore carrier like other premium airlines in the region is facing intense competition, including from budget carriers, and the move may be its way of positioning itself to take advantage of the growth in air passenger traffic expected in Asia in the coming years.

In a statement issued yesterday, SIA said the new airline was being established following extensive review and analysis and it would enable the SIA group to serve a largely untapped new market and cater to the growing demand among consumers for low-fare travel.

SIA is not new in the low-cost game as it already owns a third of Singapore-based budget carrier Tiger Airways. It also owns regional carrier SilkAir. Tiger mostly flies within five hours of Singapore's Changi airport while SilkAir flies to a slightly more upmarket set of regional destinations.

Analysts are saying the new airline will compete with Asia's largest low-cost carrier, AirAsia, and its long-haul low-cost sister airline, AirAsia X, besides Australia's Qantas low-cost unit, JetstarAsia.

But AirAsia's boss Datuk Seri Tony Fernandes is not surprised by SIA's move. “I am very encouraged by this and this vindicates the long-haul low-cost model (works). I am a big believer of open skies and fair competition.''

He added that “imitation is the best form of flattery and Malaysians should be very proud that AirAsia has led the world. I hope it removes the last obstacle of the Transport Ministry supporting the AirAsia X model so that we can maintain and grow our first mover advantage. AirAsia X should be offered all routes so that Malaysia does not lose out again.''

To him SIA's setting up of a new unit is no challenge to AirAsia or AirAsia X, which operates flights spanning Tokyo to New Dehli and onto London.

“We have been competing with airlines all our lives, they (SIA) may find it a challenge. Obviously they are threatened by AirAsia and AAX that they had to respond. So I think their response is going to be a difficult one for them to accomplish,'' Fernandes said.

SIA CEO Goh Choon Phong said: “We are very excited about what our new low-fare subsidiary will offer to consumers. We are seeing a new market segment being created and this will provide another growth opportunity for the group. As we have observed on short-haul routes within Asia, low-fare airlines help stimulate demand for travel, and we expect this will also prove true for longer flights.”

Details on the new airline's management team, including its branding, products and services, and route network would be announced later, SIA said.

Flightglobal reported that the aircraft for the flight operations would initially be sourced from the parent carrier, which has 20 Boeing 787-9s and 20 Airbus A350-900s on order. A SIA's spokesman said that subsequently, “all options are open on aircraft sourcing.”

There could be routes on which both the parent airline and the new subsidiary could operate on, although this would be decided by the management team, he added.

Source: http://biz.thestar.c...28&sec=business

#17 leon t

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Posted 26 May 2011 - 11:51 AM

believed that this new SQ no-frills set-up will more likely make it and does pose as a major competitor to Air Asia X despite what Tony says. The principal reason is that Changi itself is a major HUB in the region as compared to KLIA/LCCT; and that the sin govt have its priority to make changi as a major hub over that of giving protection to SQ for example and hence unlike malaysian govt of still blocking D7 to certain destinations. And further SQ's new set-up have access to immediate aircrafts from SQ's 772s which there are already surplus and more to come and easily this new carrier can have as many as 6 772s if it needed to straight away.

#18 flee

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Posted 26 May 2011 - 01:21 PM

And don't forget, it can also call on B744s should they need even more capacity.

I guess it all depends on whether they can create a new market niche for themselves. I guess SQ's reasoning for setting up the airline is so that it can have some market share in the LCC segment rather than zero share. I am sure that they have a long term strategy and are not just looking at the short term.

If they lease the planes from SQ, SQ will also be able to grow their leasing (and MRO) business and become bigger players. Remember Royal Brunei are also leasing B772s from SQ!

#19 Raymund Yeoh

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Posted 26 May 2011 - 02:10 PM

- I hope the Malaysian government will take a very serious note on this development. Their grip on MH has led the airline to its current destitute state when compared to SQ. It will be a tremendous (pride) loss for Malaysians if the same fate is waiting D7 as well, since the foundation that could lead to its failure in maintaining its quantum leap in this particular market segment has been exhibited by the freak controlling government.

-


Nah....i don't think M'sian gomen will give 2 hoots about it.....if they were really serious, they could have done something moons ago......rather than sit down and see MH decline like a roller coaster

#20 flee

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Posted 26 May 2011 - 02:55 PM

Quick - read this CAPA Analysis before it becomes paid content!
http://www.centrefor...st-decade/page1




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