Thursday, May 26, 2011

Singapore Airlines to establish new low fare carrier

Sending a major signal to the airline industry that the competitive landscape of long-haul travel is changing, Singapore Airlines announced Wednesday it will set up a new no-frills, low-fare carrier operating twin-aisle aircraft on medium- and long-haul routes.

SIA said in a statement that “the new airline is being established following extensive review and analysis,” which was in part focused on the runaway success of AirAsia X with its fleet of A330s and A340s. It added that the new airline would “enable the SIA Group to serve a largely untapped new market and cater to the growing demand among consumers for low-fare travel.”

The new carrier has not yet been named. It is expected to begin operations within one year. It will be wholly owned by Singapore Airlines, but will be operated independently and managed separately from SIA.

“We are very excited about what our new low-fare subsidiary will offer to consumers. We are seeing a new market segment being created and this will provide another growth opportunity for the SIA Group,” said CEO Goh Choon Phong.

He added, “We have observed on short-haul routes within Asia, low-fare airlines help stimulate demand for travel, and we expect this will also prove true for longer flights. At the same time, we remain fully committed to the further growth of SIA, which will continue to offer the highest-quality products and services to our customers.”

Reacting to the news in Toulouse, Airbus COO-Customers John Leahy told ATW, “I have been waiting for this to happen. It is quite a natural move. I'm a big believer in the LCC model.”

While noting that he doesn't have many details on SIA's plan, Leahy said the new carrier could operate A330s: “Have a look at Tony Fernandes at Air Asia X [an A330 operator] to see how well this operation can work. I suspect, also, [SIA's new carrier] will use the new low-cost terminal in Singapore.”

( Geoffrey Thomas & Kurt Hofmann - ATWOnline News)

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