News analysis

SIA's investment into fleet key to staving off competition

SINGAPORE - Singapore Airlines (SIA) has just confirmed its biggest aircraft buy in more than four years - a US$13.8 billion (S$18.8 billion) deal for 20 Boeing 777-9 and 19 787-10.

The intention to purchase was first announced by SIA in February.

The commitment, sealed in a signing witnessed by Prime Minister Lee Hsien Loong and US President Donald Trump in Washington, is a significant development for an airline that has faced some major challenges in the last few years.

Intense competition from other full-service premium airlines has put pressure on yields and profits. Between January and March, SIA reported a S$138-million loss - its first red quarter in five years.

Despite the business slowdown, SIA management has said repeatedly that the airline will continue to invest and innovate in services and products.

Fleet expansion and renewal is a key tenet of this push.

With the latest purchase, SIA now has outstanding orders for close to 140 Boeing and Airbus planes.

Operating new more fuel-efficient aircraft will allow SIA to not only manage its costs, but also explore new routes that were not economically viable with the older aircraft.

Last year, SIA marked a return of its non-stop Singapore-US services with the launch of its Singapore-San Francisco flight.

Next year, the airline will start non-stop flights to Los Angeles and New York.

The flights will be operated with SIA's new ultra long-range Airbus planes which will arrive next year.

The route and fleet expansion plans come amid a major internal overhaul by the airline which is reviewing operations across all sections.

 

SIA is also preparing to unveil new in-flight cabin products including new seats and entertainment options.

These will feature first on the airline's new A-380 planes which are expected before year end.

After a tough run, things seem to be looking up for SIA.

The challenge is for the airline to ensure that the investments and enhancements translate into profits in the long run.