Commentary: SIA's resumption of daily non-stop flights to key US cities - how necessary are they?
SINGAPORE: Singapore Airlines' (SIA) resumption of daily non-stop services to its chief US destinations reflects a strategic rather than commercial conclusion in line with an overall want to steadily increase capacity at Changi Airport despite little or no comeback in demand.
SIA last month upgraded its not-stop New York, Los Angeles and San Francisco routes to daily, resulting in 21 weekly non-terminate flights to the US.
This represents only a 32 per cent reduction compared to the 31 weekly not-terminate flights to the U.s. prior to the pandemic, including 10 to Los Angeles, 10 to San Francisco, seven to New York and 4 to Seattle.
SIA's conclusion to bring back more than two-thirds of its ultra long-haul flights was a surprise given the bleak demand state of affairs, which continues to drive an over 97 per cent drop in passenger traffic at Changi, and the fact regional travel is expected to recover earlier intercontinental travel.
Need REMAINS LOW
The very fast ramp-upwardly from only three weekly flights to the US – a schedule SIA maintained from the finish of March 2022 until early Nov 2022 – was particularly surprising.
The three flights to Los Angeles that were maintained throughout the crisis were inappreciably full, averaging a load factor of less than 15 per cent over the 7 months fifty-fifty though they were the only SIA service to the US.
SIA resumed flights to New York in early November 2022 and San Francisco in mid-Dec 2022 with three weekly flights initially on each route.
Both New York and San Francisco were upgraded to daily on Jan 18 along with Los Angeles, which was initially upgraded from three to five weekly flights in December.
The starting time New York flight left Singapore on Nov 9 with only four passengers. The load factor has non been much meliorate since.
For the calendar month of Nov, SIA's average load gene on The states flights was only 11.three per cent compared to 83.3 per cent the year prior.
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SIA'due south The states load factor was a slightly higher 13.5 per cent in Dec followed by 13.eight per cent in January 2021.
Information technology is probable the boilerplate load factor volition drop once more in February and March given the recent increment in capacity and new travel restrictions in the Usa.
LESS CARGO TO THE United states of america
SIA's load factor on long-booty flights to Europe was even lower in January, slipping to just ix.v per cent, impacted past new travel restrictions imposed after the emergence of the new UK strain.
However, the average Europe load cistron was higher than the average US load factor in the vi prior months, from July to December 2020.
Europe flights accept been generating significantly more revenues than US flights – even with the recent drop in rider traffic – as Europe flights carry significantly more cargo.
For the U.s. flights, there is limited cargo capacity as the flights are very long and therefore require more than fuel that essentially comes at the expense of additional cargo.
During normal times, when rider cabins are full or nigh full, none of SIA's flights from the Us are able to behave much cargo other than bags due to the demand to carry more than fuel for ultra long-booty operations.
With the electric current surround of nearly empty passenger cabins some cargo can exist carried, essentially equivalent to the weight of the passengers that would ordinarily exist on these flights, but non well-nigh equally much every bit what tin can be carried on other flights.
ONE-Finish Better THAN Not-End FOR CARGO
To maximise cargo payload SIA would exist better off operating one-cease flights to the US, which it had to Houston, Los Angeles, New York and San Francisco prior to the pandemic.
Operating ultra long-haul flights for express cargo and very few passengers is hardly efficient given the huge corporeality of fuel required for 16 to xix-hour sectors.
US non-stop flights are strategically important for both SIA and Singapore overall every bit they provide important economic links to major fiscal centres and help connect Changi with the residuum of the world.
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Even so, supporting 21 weekly US flights at this early juncture, when the recovery phase has non yet begun, seems excessive.
SIA's operation to Europe is also being supported for strategic reasons but this non equally excessive given that SIA's Europe capacity is but almost twoscore per cent of pre-pandemic levels and the larger cargo volumes that tin can be carried, including European-manufactured COVID-19 vaccines.
SIA is currently operating 44 weekly passenger flights to x destinations in Europe, which has always been a much bigger market for SIA than North America.
SIA Group's overall capacity, as measured by available seat kilometres (ASKs), was downwards 79.6 per cent concluding calendar month.
The group plans to proceed adding more than flights – despite very weak demand that has deteriorated farther since the beginning of the year – and reach 25 per cent of pre-pandemic capacity past April.
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As it continues to add capacity over the side by side few months, SIA aims to reduce its monthly cash burn down from about S$250 million to about Southward$200 million.
While this seems hard to reach in the current environment, it is plausible – even if load factors continue to drop – considering of government support.
LOWER THAN AVERAGE
SIA Group's organisation-broad passenger load factor was only 11.3 per cent in January, compared to 84.5 per cent in January 2020.
The group'southward load factor has dropped seven consecutive months as the capacity it has added has exceeded demand.
While all airlines have been operating international flights at previously unimaginable depression load factors – with strong cargo in the belly helping start some of the costs – the SIA Group's load cistron has been especially low.
In December, the average international load factor was 29.2 per cent for the Asia Pacific airline sector and 47 per cent for the global industry while SIA Grouping's load factor was 13.vii per cent.
The global figure is from the International Air Ship Association (IATA) while the Asia Pacific figure is from the Association of Asia Pacific Airlines (AAPA), which reports aggregate data based on 40 airlines based in the region.
The college global figure reflects that some regions such as the Centre Due east have partially reopened while in Asia Pacific near all borders have remained closed.
The much lower load factor for SIA compared to the Asia Pacific boilerplate partially reflects a strategic conclusion by SIA to add back chapters at a faster rate than well-nigh peers.
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SIA Group'southward ASKs have increased every month since April 2022 and tripled from July 2022 to January 2021.
It may be time to temporarily trim back, particularly the United states of america flights, rather than go along the planned capacity expansion.
Somewhen international travel will finally kickoff to recover merely information technology will likely be several months.
In the meantime fewer flights tin be operated and plans for increasing chapters can be delayed until 2d half of this yr while non compromising the long-term strategic position of SIA and the Changi hub.
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Brendan Sobie is the founder of Singapore-based contained aviation consulting and assay firm Sobie Aviation. He was previously main annotator for CAPA - Centre for Aviation.
Source: https://cnalifestyle.channelnewsasia.com/commentary/commentary-sias-resumption-daily-non-stop-flights-key-us-cities-how-necessary-are-they-283091
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