Wednesday, June 01, 2022

Singapore Air eyes overseas hubs after Covid slump in domestic market, India key growth area

Singapore/New Delhi Singapore Airlines Ltd. is committing to a strategy of working with international partners and establishing overseas hubs after the pandemic exposed the financial dangers of not having a domestic air travel market.

The airline is open to opportunities and will evaluate potential synergies, Chief Executive Officer Goh Choon Phong said in an interview with Bloomberg News on Tuesday.

“We realized that without a domestic market has its challenges,” Goh said. “That’s why we have the multi-hub strategy. We establish an external hub, whereby we hope we can then participate in the growth from that market.”

Goh, a 58-year-old industry veteran who joined Singapore Airlines in 1990 and became CEO in 2011, is trying to guide one of Asia’s most pre-eminent carriers out of the toughest period in its history. This time last year, the airline had just announced a record annual loss and was flying only a few thousand people a month compared with as many as 2 million passengers in pre-Covid times. Unsure when the situation might improve, Singapore Airlines had to raise billions of dollars to get through the crisis.

Now that Singapore and most other countries around the world have opened their borders again to quarantine-free travel, the carrier was able to increase traffic to more than 1 million passengers in April, the most since the pandemic began.

In the interview, Goh highlighted India as a key growth area, saying it is expected to become the world’s third-biggest aviation market by the middle of this decade, if not before.

Singapore Airlines teamed up with Indian conglomerate Tata Sons Pvt. to form full-service carrier Vistara, which started flying in 2014. Vistara now serves nine overseas destinations and 31 in India, though it has yet to make a profit.

“India is obviously a very important one because it’s going to be massive,” Goh said. “We want to continue to look at scaling up Vistara and ensuring that it grows well.”

Apart from the huge domestic market — already the world’s third largest — India’s allure also lies in international passengers. Close to 4.8 million people traveled between India and Singapore in 2019, before the pandemic, data from India’s Directorate General of Civil Aviation show.

With Vistara, Singapore Airlines aims to cater to Indians flying to Europe and the US, poaching them from Gulf rivals that dominate the Indian overseas air-travel market.

Goh refused to be drawn on whether Singapore Airlines would be interested in buying a stake in Air India Ltd., saying the company doesn’t comment on confidential discussions it may or may not be having with partners.

“What I can tell you is that both Tata Sons and ourselves are equally committed to ensure that Vistara continues to grow,” he said.

01/06/22 Kyunghee Park/Anurag Kotoky & Haslinda Amin/Print

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