Singapore Airlines Ltd, the sixth-worst performing stock in Singapore last year, may have an even rougher ride this year. Competition from a slew of startup carriers and the potential for another SARS outbreak are making investors wary of Southeast Asia's biggest airline.
Singapore Airlines and its regional unit SilkAir Pte already battle cheaper fares offered by Jakarta-based Lion Air and Malaysia's AirAsia Sdn. From this year, Singapore Airlines will compete with Singapore-based Valuair Ltd and even its own Tiger Airways, a discount airline it's setting up with Indigo Partners LLC and Irelandia Investments Ltd.
"The main overhang on Singapore Air's performance has been the low-cost carriers and what they're going to do," said Caleb Woo, who holds Singapore Airlines shares in the US$1.4 billion he helps oversee at DBS Asset Management Ltd in Singapore. "There are a lot of people who are attracted by cheaper fares. There will be some detrimental impact."
Singapore Airlines, 57 percent-owned by the government, trimmed wages and fired almost 600 workers last year, the biggest job cuts in its history.
Still, questions about whether Singapore is doing enough to remain an aviation hub were raised this month by Lee Kuan Yew (
The airline and Changi airport must cut costs "by 10 to 15 percent," Lee said in an interview with Channel NewsAsia, a unit of state-owned MediaCorp, the city's biggest broadcaster.
"If we don't have that discipline or the resolve or the wit to think of new strategies, new ways to overcome the competition, then we deserve to be sidelined," said Lee, who remains a Cabinet minister.
Investors, though, remain concerned that SARS will make a comeback, pushing tourists and business executives to curb travel and forcing airlines to scrap flights.
Forced to cut capacity by about a third, the carrier had its first-ever loss in the three months to June 30.
Singapore Airlines faces further pressure from the low-cost carriers.
Malaysia's AirAsia plans this year to start flying from Singapore, and Lion Air sells return trips from the city-state to Jakarta in Indonesia at a third of Singapore Airline's fare.
AirAsia, in a tilt at its rival's famous "Singapore Girl" advertising campaign, last month ran a full-page ad in Singapore's Streats newspaper, boasting, "There's a new girl in town. She's twice the fun and half the price."
Budget carriers are likely to win about a 4 percent share of air travel within Asia this year, said Kevin O'Connor, head of transport research at CLSA Asia Pacific Markets in Hong Kong.
"You've gone from two to five" carriers, said O'Connor. "You don't have to be very good at math to work out that's a huge increase in competition."
Things could get tougher. Richard Branson's Virgin Blue Holdings Ltd, which has gained 30 percent of Australia's domestic market, also wants to start a budget carrier in Asia, as does Thai Airways International Pcl.
Singapore Airlines is trying to stay above the fray.
"While we have an interest in the low-cost market and want to be part of its development, our focus is on being a real six-star carrier at the premium end of the market," the company said in a statement.
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
Taiwan was ranked the fourth-safest country in the world with a score of 82.9, trailing only Andorra, the United Arab Emirates and Qatar in Numbeo’s Safety Index by Country report. Taiwan’s score improved by 0.1 points compared with last year’s mid-year report, which had Taiwan fourth with a score of 82.8. However, both scores were lower than in last year’s first review, when Taiwan scored 83.3, and are a long way from when Taiwan was named the second-safest country in the world in 2021, scoring 84.8. Taiwan ranked higher than Singapore in ninth with a score of 77.4 and Japan in 10th with
China's military today said it began joint army, navy and rocket force exercises around Taiwan to "serve as a stern warning and powerful deterrent against Taiwanese independence," calling President William Lai (賴清德) a "parasite." The exercises come after Lai called Beijing a "foreign hostile force" last month. More than 10 Chinese military ships approached close to Taiwan's 24 nautical mile (44.4km) contiguous zone this morning and Taiwan sent its own warships to respond, two senior Taiwanese officials said. Taiwan has not yet detected any live fire by the Chinese military so far, one of the officials said. The drills took place after US Secretary