Singapore Airlines wants its high-end customers to embrace their lazy side

Travelers in business class can pretend they’re slumped in a deck chair by the beach at 30,000 feet (9,100 meters) above sea level or feel like they’re lounging on a sofa by choosing two new preset seat positions -- “Sundeck” and “Lazy Z.”
 
The airline is undertaking its costliest revamp of seats in eight years to make them wider, longer and equipped with bigger TV screens. With Qantas Airways planning to let front-end customers sleep from gate to gate and Emirates and Etihad offering showers and butlers to stop in the Middle East’s glamor cities, Singapore Air has a crop of new challengers.

“A revamp prevents defection to other carriers,” said Timothy Ross, the head of Asia-Pacific transport research at Credit Suisse Group AG in Singapore. “The last thing high-net-worth travelers want to do is spend time cooling their heels in Doha or Abu Dhabi or Dubai. No matter how good the champagne is there, I would rather go direct.”
 
Singapore Air, Asia’s third-biggest carrier by market value, is carrying out a $325 million refurbishment across its Boeing Co. 777-300ER fleet for all price categories. The revamp of the 19 777s starts early next year and is projected to be completed in September 2016, said Nicholas Ionides, the airline’s spokesman.

          A Singapore Airlines (SIA) stewardess stands next to a display of the new Singapore Airlines First Class seat during their next generation cabin product launch in Singapore.

 (Roslan Rahman via AFP/Getty Images)

 

The seats will be as long as 82 inches (2 meters) and as wide as 35 inches in first class, while seats in business will be 7 inches slimmer. Entertainment screens will be expanded to 24 inches and 18 inches, respectively. Economy class customers will also get bigger seats and screens.

 

Singapore Air has three newer 777s that already are fitted with the larger seats and screens on routes to cities such as London and Tokyo.

 

“It reinforces their premium position,” said Brendan Sobie, a Singapore-based analyst at CAPA Centre for Aviation. “It shows that they still have confidence in the top end of the market, which isn’t really a growing market compared to the lower, budget end.”

 

The carrier is also spending more than S$100 million ($77 million) to upgrade its airport lounges over five years, with the first one completed in Sydney last December.

 

“Premium-class yields are stable and actually that’s why we continue to invest,” Singapore Air Chief Executive Officer Goh Choon Phong said today. “It’s continual improvement we’re making for all the products, whether it’s in-flight entertainment, whether it’s the seat itself.”

 

The stock dropped 0.3 percent to S$10.12 at the close of trading in Singapore. The benchmark index fell 0.1 percent.

Customer Losses

Asian carriers including Singapore Air have lost customers to operators in the Middle East such as Qatar Airways Ltd. and Etihad Airways PJSC, which have premium-class offerings including in-flight showers and butler service, said Shukor Yusof, founder of aviation research firm Endau Analytics.

Premium passenger traffic within Asia dropped for a third straight month in August from a year earlier, according to the International Air Transport Association.

“Renewing or revamping products doesn’t work anymore,” Yusof said. “It’s not enough to persuade people. Gulf carriers are hitting them very hard.”

Some of that was reflected yesterday when Singapore Air said its second-quarter net income fell 43 percent to S$90.9 million. Sales were little changed.

Competitive Landscape

“Demand is generally flat, and yields will remain under pressure amid intense competition from other airlines and promotional activities in weaker markets,” Singapore Air said in a statement. “The operating landscape for the airline industry remains competitive and challenging, as an uncertain global economic climate and geopolitical concerns persist.”

The disappearance of a Malaysian Airline System plane carrying 239 people in March and Chinese President Xi Jinping’s crackdown on official spending and corruption have discouraged visitors from the world’s most populous nation to Singapore and neighboring countries.

Travelers from China, Singapore’s biggest source of tourists after Indonesia, plunged 29 percent in the first eight months of this year, according to the Singapore Tourism Board.

To gain corporate and leisure travelers looking for greater comfort at lower fares, Singapore Air will also introduce premium economy services in the second half of next year, joining carriers such as Cathay Pacific Airways and Qantas that already offer the seat category.
 
“People are now more price sensitive than before,” Yusof at Endau said. “Plus they have more choices.”

 (Kyunghee Park - Bloomberg News)