What Qantas’ strategy shift means for Changi, SIA

From March next year, Qantas is re-routing its popular Sydney-to-London flight via Singapore instead of Dubai.

This comes five years after Qantas pulled out from the Republic to partner with Emirates airline to use Dubai as a stopover for its Australia-Europe flights.

The new routing is good news for Changi Airport, a testament to the importance of its hub status.

Yet there are longer-term implications worth considering for not only Changi, but also Singapore Airlines.

QANTAS’ CALCULATION

It is easy to jump to the conclusion that Qantas’ move may have been prompted by security concerns in the Middle East, but the restrictions on the carriage of laptops and other electronic devices in the aircraft cabin by the United States and Britain have since been relaxed.

Neither is it for the love of Singapore. Clearly Qantas is making a strategic move.

For starters, only the Sydney-London flight is re-routed through Singapore and not the flight out of Melbourne. The latter, which used to also stop over in Singapore, will fly via Perth instead, inaugurating Qantas’ first non-stop flight from Australia to Europe.

This is a precursor to a similar Sydney-London flight by 2022, when a new jet capable of flying the 20-hour distance becomes available, by which time Singapore may again be dropped.

Yet as part of the strategy to offer its customers choice, Qantas may retain the option of a Changi stopover, although it is likely an initial surfeit in capacity will cause it to reduce the frequency. So why the apparent change of mind?

Qantas CEO Alan Joyce said the partnership with Emirates has met with great success and Dubai will remain an important hub for Qantas customers, who will continue to have access to the large number of destinations served by Emirates. In fact, Qantas has extended the partnership for another five years.

Both airlines are moving away from operating the same routes, so as to relocate limited resources to seize opportunities elsewhere, thus enabling them to expand their international network.

Yet Qantas cannot dismiss the strategic importance of Singapore. Dubai may be offering Qantas customers an impressive number of onward connections to some 60 destinations in Europe, Africa and the Middle East, but it is a question of relative importance.

Changi remains an attractive gateway to Asia for Qantas, even as it has mounted more direct flights between Australia and Asian destinations such as Shanghai and Beijing. Besides, Changi can be an important regional feed for its Kangaroo Route.

It is therefore not surprising Qantas will be increasing its existing daily flight from Melbourne to Singapore, using the larger Airbus A380 instead of the A330 currently deployed for the route.

In a way, the loss of the Melbourne-London flight is compensated by an increase in regional flights, so it is not all bad news for Changi, though not necessarily so for SIA. Herein sometimes lies the conflicting interest between an airport and the national carrier — more airlines using Changi’s facilities means increased competition for SIA.

But SIA is no stranger to competition. Over the years, it has faced off tough challenges while embracing the competition. If, as Mr Joyce said, the increased capacity is meant to “meet the strong demand in Asia”, then SIA, a strong contender in the region, can also benefit from the growing market.

It is wishful thinking that Qantas will be able to attract London-bound travellers from Singapore to fly via Sydney and Perth.

On the other hand, Qantas should be concerned about the proximity of Australia making it easier for travellers to connect cheaper options out of Singapore, particularly offers by low-cost carriers such as Scoot and Norwegian Air Shuttle.

However, Changi must be equally concerned about the impact of being bypassed in the longer term as non-stop flights between Australia and Europe become more popular.

Australia has been identified as a “strategic source market”, which used to be ranked as Changi’s top country market after Indonesia.

It is now ranked fourth. The airport will be challenged to convince travellers flying the Kangaroo Route why a stopover at Changi is worth the diversion for an absolutely satisfying experience that is not found at any other airport.

Its latest addition of Terminal 4 shows how seriously Changi is taking the challenge to turn the airport into a destination in itself. The joke goes around that this is one airport where travellers actually welcome a flight delay.

But it is not just about aesthetics and visitor attractions. Changi thrives on reliability, customer care, and fast and efficient processes that take the stress out of travel. These are the reasons why it has been voted one of the world’s best, if not the best, airport.

SIA faces the same threat of a shift in preference for non-stop flights out of Australia — an important market in its network — since travellers will want to get to their destination in the shortest time possible and avoid the hassle of a stopover.

However, some travellers may find flying the ultra-long haul without a break too much of a stretch, particularly if it entails crossing several time zones. Recognising this, Qantas is already working with experts on ways to make the journey comfortable and help travellers reduce jet lag.

So the prospect is not all that bleak for SIA, which is reputable for its inimitable service, product innovation and advanced technology — the same reasons why it ranks among the world’s best airlines. In the current price-sensitive market, when it is said that Qantas will be charging a premium for its non-stop flights to London, SIA can certainly make the fare difference matter.

Although Changi is already known to be pampering transit passengers, this is where the airport and SIA can collaborate to further strengthen their case for a hassle-free, rewarding and rejuvenating Changi stopover.

ABOUT THE AUTHOR:

David Leo is a published author and aviation veteran.