We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Mon 1 Oct 2007 04:00 AM

Font Size

- Aa +

Final countdown

After months of waiting, Singapore Airlines is finally ready to unveil Airbus' super-jumbo plane.

On October 25, the world's media will gather in Asia for the latest chapter in aviation history. With only weeks remaining, Singapore Airlines is set to go where no other carrier has gone before by launching the first commercial Airbus A380 flight. It's been a long wait, with aircraft manufacturer Airbus originally set to deliver the super-jumbo in early 2006. But following several delays, the airline is now focusing on the inaugural A380 flight from Singapore to Sydney after receiving the plane earlier this month.

"We will have to put on a good show," says Meow-Seng Lim, Singapore Airlines' general manager for the Middle East. "We are used to the media attention. We always want to be in the limelight and get publicity for all the right reasons."

There were talks about adding additional routes but this year we have had problems because of delays to the Airbus A380.

Once satisfied the plane would arrive in time, Singapore Airlines' management turned its attention to publicising the event. In August, the airline organised an internet auction for passengers hoping to board the flight. Some 471 seats were available from online marketplace ebay, with opening bids ranging from US$3.80 to $380 for economy and first class seats respectively. Unsurprisingly, demand has been high with Australian businessman Julian Hayward the biggest spender after paying $100,000 for a seat.

Elsewhere, other passengers have paid a combined $300,000 to book their tickets. After announcing the auction, which opened on August 27 and closed September 10, the airline revealed all proceeds would go to charities in Australia and Singapore. For Lim, selling tickets online was a smart PR move. "This auction is very creative and something we have done before," he says. "In the past, we auctioned off tickets after donating them to functions. But with the new technology available these days, we can now do it on ebay and reach a bigger market.

There's more publicity because it is a much bigger event. We were getting bids from all over the world, averaging 1000 a day." The airline's management also deserves credit for securing delivery of the first A380 before rival airlines, according to Lim. "We are a forward planning airline because we always think way ahead - but not just when it comes to the A380.

"We find an aircraft to suit our needs and people often look to us to see if we have ordered specific planes. If they see us ordering, they follow and aircraft manufacturers know we are ahead as far as ordering planes is concerned."

While the A380 launch is the carrier's main priority, Lim is more focused on its Middle East operation. As general manager, he is responsible for sales and marketing and seat factors on flights to and from the region. Lim also oversees the airline's operation at Abu Dhabi International Airport and Dubai International Airport, which involves safety and security procedures. The airline operates 10 weekly departures between Singapore and Dubai, and connecting flights from the UAE to Istanbul and Moscow. It also flies to Abu Dhabi three times a week, with Boeing 777s the main aircraft deployed on Middle East routes.

Traditionally, the carrier concentrated on Asian destinations but the Middle East is an increasingly important market for Singapore Airline's operation. Indeed, with Dubai and Abu Dhabi considered the connecting hubs between Europe and the Far East, the airline's management was determined to expand in this region.

In recent years, the directors have achieved their goal after establishing routes to and from the UAE. But Lim admits competing with the Middle East's leading carriers, such as Etihad Airways, Emirates and Qatar Airways, is unlikely. "We have a lot to learn from them, but as far as competition is concerned there is more in South Africa," he says. "The competition is steeper in Africa because we are going for the same market."

Lim says Emirates has taken advantage of the ‘open skies' agreement with Singapore by offering 24 weekly flights to the city. He adds Singapore Airlines was set to launch additional routes on the same flight path until aircraft delivery delays scuppered management's plans. "There were talks about adding additional routes, but this year we have had problems because of delays to the Airbus A380 - there isn't enough to go around. But when we get more aircraft we will definitely get more frequencies and destinations in the Middle East." Despite the setback, Lim insists increasing flight frequencies and destinations across Singapore Airlines' network remains high on the agenda. "Every six months we make changes to our schedule either in terms of new destinations or new frequencies. Sometimes there is more demand during certain periods of the year in Australia, India or Japan for example."

Since joining 12 months ago, Lim has surpassed his target for the current financial year. He refused to talk figures, but admitted the company was "well ahead" amid favourable market conditions. "I can't take credit for everything because the market has grown. I am responsible for the Middle East region and you will see from most of the statistics that we have grown about 30% recently. This is largely down to business co-operation between the Middle East and Singapore, which we expect to see increase." Lim also pointed to strict employee resources as a factor behind the carrier's recent profit surge. "We as an airline are very cost conscious and try to do more things with less staff, so we will not spend on new employees," he says.
Having moved to the region from South Africa, Lim needed time to study the Middle East market. After identifying the most profitable routes and destinations, he concentrated on increasing internet sales amid the airline's ongoing switch to e-ticketing.

Like all carriers, Singapore Airlines has until May 31, 2008 to satisfy the International Air Transport Association's deadline for converting to online e-tickets from paper. So far, 97% of the carrier's tickets have been updated, making Singapore Airlines the number one e-ticket provider outside the US.

"We set our changeover target for this year, so it should be 100% by the deadline," Lim says. "We had to do this because unless airlines change the way they work they will not be able to compete. Technology has gone so far ahead and if you don't keep up you will face big problems."

According to Lim, switching to e-tickets has forced the airline to re-evaluate its interline agreements with the industry's smaller players. Some lower-end carriers struggling to make the switch may have to continue issuing paper tickets after the deadline. The upshot for partner carriers like Singapore Airlines is increased administration costs that would no longer exist had the smaller carrier converted its tickets. Lim: "We've reached a point where you have e-ticketing agreements with other airlines across the world and if a carrier chooses not to make the change, we will look at our operating figures. If the airline is not producing much revenue for our operation, we would rather drop them." Whether Singapore Airlines reduces its interline agreements remains to be seen, but the carrier will continue looking for acquisition opportunities. Last month, the carrier agreed to acquire a 24% stake in China Eastern for $918 million. The offer values the Hong Kong-listed airline's shares at $0.49, a 1.9% premium over its closing price on May 21.

China Eastern's parent company China Eastern Air Holding is buying 1.1 billion new shares to secure a 51% controlling interest. Meanwhile, the 24% stake that Singapore Airlines has agreed to buy will be split with its parent company Temasek Holdings. The businesses will own 15.7% and 8.3% respectively. For some analysts, it's a questionable deal. During the past two years, the Chinese carrier has reported heavy losses and amassed more than $824,000 worth of debt. Despite the company's recent financial difficulties, president Cao Jianxiong claims China Eastern will be profitable in 2007.

With less than a year to wait, aviation industry figures will know soon enough whether Jianxiong was right. But the doubts surrounding the company's financial position has done little to deter Singapore Airlines.

"The aviation industry in China has changed over the years," Lim says. "There are now many regional carriers, leading to the civil aviation authority putting them together following problems with air safety and crashes. They were consolidated into three main carriers and we are fortunate to have one of them."

Under Chinese law, outside investors can only own up to 25% of a local business. According to Lim, Singapore Airlines may acquire the remaining 1% in China Eastern - although there are no immediate plans. Instead, management will concentrate on helping restore the Chinese carrier to profitability, while also overseeing other interests.

Indeed, Singapore Airlines also holds a 39% stake in low-cost carrier Tiger Airways. The airline, which operates from Singapore, will launch domestic flights using A350s in Australia by next year. Lim and his colleagues are confident demand for the service will be high - although doubts remain about the airline's planned service between Los Angeles and Sydney.

"We had an agreement but the Australian government backtracked," Lim says. "Flights from Sydney to Los Angeles have ‘open skies' but the government stopped us from operating similar services, saying it wanted to protect Qantas [Australia's national carrier]. That's not right because we had already signed an ‘open skies' policy so why are they backtracking now? They say it will take a few more years to evaluate the situation, but Virgin Blue will fly from Sydney to LA soon, which isn't right because we asked for the rights first." While doubts remain concerning Singapore Airlines' Sydney-LA service, Lim is more interested in further developing the Middle East operation. Having already spent one year in Dubai, he expects to be in the emirate for at least another 12 months.

During that time, Lim's main objective is to increase ticket sales and oversee the general operation. "In terms of efficiency, staff and turnover, the job is manageable," he adds. "I'm in the office from 9am-6pm, but after that it's a case of going out to meet clients in a relaxed setting with some entertainment. It's part and parcel of the job."

Digital magazine: Read the latest edition of Arabian Business online

For all the latest transport news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.