New cabins for Singapore Airlines; no plans for premium economy class

In-flight entertainment, service levels packaged to keep it ahead of the game

Singapore Airlines will roll out its next- generation cabins, which comes with new and more comfortable seats, in September. But travellers hoping for a premium economy class will be disappointed.

SIA currently has no plans to offer this, chief executive officer Goh Choon Phong told The Straits Times. "When we think the time is right, we will do it but it's not quite that time yet," he said.

An increasing number of carriers such as Cathay Pacific and Qantas offer premium economy tickets for travellers who cannot afford business class fares, but do not mind paying more for extra space and comfort.

Some industry watchers believe SIA should do the same to boost profits, but others, including UOB Kay Hian's aviation analyst K. Ajith, are less convinced.

He said: "You may get some people upgrading from economy but you also risk your business class passengers downgrading. SIA has probably done the sums and decided the potential risks outweigh the gains."

As for the new cabins, SIA's top brass who met journalists yesterday, a day after the airline unveiled its profits for the year which ended March 31, were reluctant to say more about what travellers can expect.

It will be the airline's biggest cabin overhaul in more than five years.

As it prepares for a big-bang launch, SIA continues to grapple with a tough external environment, which dragged down its operating profit for the year to March 31 by 19.8 per cent, to $229.2 million.

The net profit of $378.9 million was 12.8 per cent higher from a year ago, but this was mainly on the back of an increase in non-operating items such as surplus on the sale of aircraft and spare engines.

The key issue facing SIA is that, while it continues to carry more passengers, profit margins are thinner as travellers are more price-sensitive especially in markets that are served by rival carriers, including budget airlines.

The question is whether the airline can regain its premium pricing power, and to what extent its new cabin products will boost its status in the market, analysts said.

SIA executive vice-president (commercial) Mak Swee Wah said: "What we want to put out to the market is not that we have the best seat or the radical game-changing seat. It is a whole package."

This includes cabin products, in-flight entertainment and service levels, he explained.

"This is how we intend to stay ahead of the game and hopefully rise above airlines who talk about having the largest number of planes or the biggest fleet of Airbus 380s," he said in an obvious reference to key rival Emirates.

He added that SIA's regional arm SilkAir is growing fast, and while its expansion has been ahead of demand, the strategy is a long-term one.

As it waits for economic conditions to pick up, SIA will continue to cement partnerships with like-minded carriers and take advantage of growth in the Asia-Pacific and low-cost segment, Mr Goh said.

On whether the airline is doing enough to ensure its long-term sustainability, he said the market is tough for all carriers. And worse for a carrier such as SIA which operates long-haul routes, which means higher costs, to markets like Europe and the United States with sluggish economies.

He said: "The combination is not great... But we think at some point, there will be recovery and we will be well-positioned to tap the recovery."

karam@sph.com.sg