Covid-19 has caused deep crisis for SIA, Changi Airport Group: Minister

Had it not been for major moves like cutting jobs, Singapore Airlines (SIA) would not be around today, Transport Minister Ong Ye Kung said yesterday, as he unpacked how Covid-19 has caused a "deep crisis" for the national carrier and Changi Airport Group (CAG).

Global travel restrictions arising from the pandemic have decimated Changi Airport's business, and while SIA has worked to stave off the worst of the crisis, the coast is far from clear, Mr Ong said in Parliament.

SIA has raised about $11 billion in liquidity since the start of the 2020/2021 financial year in April through avenues like a rights issue backed by Temasek, long-term loans secured on some of its planes, as well as committed lines of credit and a short-term unsecured loan from financial institutions.

Noting that SIA had recorded its largest quarterly loss on record in the first quarter of fiscal year 2020, Mr Ong said that it is trying its best to reduce cash burn, preserve its core capabilities and explore all ways to generate revenue.

He also pointed out that while SIA had made the tough decision to cut jobs, a recently concluded agreement with its pilot union for pilots to take deeper salary cuts meant it managed to reduce the number of retrenchments from 2,400 to 2,000. "Without the recent major capitalisation exercise, there would not be an SIA today, but it is far from being out of the woods," said Mr Ong in a ministerial statement on aviation recovery here.

He revealed that Changi Airport is now serving just 1.5 per cent of its usual passenger volume and 17 per cent of the pre-Covid-19 number of flights. It has also plummeted to be the 58th busiest airport for passenger traffic, down from seventh place.

This drastic drop in ranking is due to Singapore's small size and its reliance on international traffic, explained Mr Ong in response to Mr Gerald Giam (Aljunied GRC), who had asked why Changi is worse off compared with other airports.

Large nations like China and the United States have bigger populations who are not just flying within the country but also generating international traffic, he added.

CAG, too, has lost revenue streams, said Mr Ong. Shops and restaurants in the airport are seeing fewer customers, and many of them have closed. This has caused CAG to dip into its reserves to preserve cash to stay alive.

The upcoming Terminal 5, a large-scale project being undertaken by the group, will be paused for two years so that efforts can be focused on the pace of air travel recovery, said Mr Ong in response to Mr Liang Eng Hwa (Bukit Panjang), who had asked about the issue.

He added that no effort will be spared to support SIA, CAG and other companies in the aviation sector, and pointed out that the sector benefits from the highest tier of support from the Government's Jobs Support Scheme to co-pay salaries.

Other avenues of help for firms in the industry include cost relief through the Enhanced Aviation Support Package, and temporary redeployment programmes for workers affected.

Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) suggested Singapore ramp up its logistics and cargo movement capabilities, as Mr Ong had said that Changi Airport is serving 21/2 times more cargo flights now compared with pre-pandemic times.

These capabilities will be bolstered when demand for them increases, said the minister, but he warned that cargo flights are only 7 per cent of total flights and aviation cannot be restored by banking on cargo flights alone.

Mr Ong also touched on one of the suggestions by SIA to generate revenue and get pilots to fly by conducting flights to nowhere, where passengers pay to go on scenic voyages that would take off and land in the same airport.

Noting that some MPs like Mr Dennis Tan (Hougang) and Associate Professor Jamus Lim (Sengkang GRC) had asked if the Government would support this, Mr Ong said that this has become a moot point, as SIA said late last month that it would be scrapping this idea.

But he added the Ministry of Transport (MOT) would always try its best to support SIA in times of crisis, taking issue with Prof Lim's suggestion to impose an environment tax on the carrier had the flights taken off. "What I will not contemplate is to impose on them an environment tax at this time, as Associate Professor Jamus Lim indicated in his question, because that will just worsen the crisis for SIA," said Mr Ong.

Prof Lim later asked during question time why such a tax could not be considered further, as SIA could pass on the cost of such a tax to consumers - to which Mr Ong replied that Singapore was in a crisis and SIA needs as much help to preserve its cash as possible.

Explaining this with the Chinese proverb luo jing xia shi, which means to throw a stone at someone who has fallen into a well and refers to making a bad situation worse, Mr Ong cautioned against exacerbating things for SIA. He added that further conversations about an environmental tax can carry on later when the Covid-19 situation improves.