SIA says airfares pushed higher by pent-up demand will fall as situation eases

SINGAPORE — Strong demand for flights is fuelling high ticket prices now, but airfares will fall in the months ahead as demand stabilises, Singapore Airlines Group (SIA) said on Thursday (May 19).

A senior executive at the national carrier made the comment during a briefing on SIA's full-year results, which saw a narrower annual loss of S$962 million.

The airline group also announced that it was ready to ramp up operations further amid returning demand for international air travel with borders reopening in almost all key markets.

SIA's third consecutive net loss in the 12 months ending March 31 was a significant improvement from the S$4.3 billion loss a year earlier that included impairment charges on 45 older aircraft.

Responding to a question on whether the airline intends to keep ticket prices at higher levels to tap possible pent-up demand, Mr Lee Lik Hsin, SIA's commercial executive vice-president, emphasised that it was a function of supply and demand.

He said that flights are “quite booked up for many sectors” for at least the next two months, thereby causing ticket prices to be high.

“If you go out beyond two months, the prices come back down.”

SIA also regularly conducts promotions to encourage its passengers to make earlier bookings to benefit from lower prices, Mr Lee added.

“So I will say that there are attractive prices out there in the marketplace. It really depends on when you need to travel and where you need to travel.”

On whether the higher prices may impact growth, he said that the airline has not seen such a trend.

“Like we said, we will continue to be nimble and watch out for that and adjust prices accordingly to make sure that all cabin classes are filling up nicely.” 

In terms of manpower and how many air crew members were laid off during the pandemic, Mr Lee said that SIA has “kept enough” employees. It started recruitment a couple of months ago and is “in a good place” to support the capacity growth it anticipates.

And while the manpower strength is “slightly lower” than pre-pandemic levels, Mr Lee highlighted that SIA Group is also operating with a lowered passenger capacity than before Covid-19 — coming in at 61 per cent for the first quarter of financial year 2022-2023.

“So the numbers that we have will be tracking the capacity that we are planning to deploy until the end of the year,” he added.

The airline did not divulge specific figures despite attempts by a few reporters to pin them down to do so.

In September 2020, SIA Group announced that it had to let go 2,400 workers or almost 9 per cent of its workforce in Singapore and overseas.

At a media briefing eight months later in May last year following the release of SIA’s annual financial results, its chief executive officer Goh Choon Phon said that the group did not plan further retrenchments for the upcoming financial year.

SPONSORING FORMULA ONE

The national carrier was also asked about its decision to extend its title sponsorship for the Formula One race in Singapore for three more years until 2024, despite recording annual net losses.

SIA first signed as the title sponsor for the race in 2014 for four years and then extended its sponsorship twice, in 2018 and 2020, for two years in each instance.

Mr Goh said on Thursday that after negotiating with partners and relevant parties, the airline group concluded that it was “a worthwhile deal” in view of the “spin-off effects” in terms of bringing people into Singapore and SIA’s brand exposure.

Mr Goh also said that the company’s growth plans will not be too affected by the delayed delivery of new Boeing 777X planes, after the aircraft maker confirmed last month that delivery of the planes will be further delayed to 2025.

“The way that we have organised our fleet plant is such that we do have some flexibility in terms of making up for any potential loss in capacity,” Mr Goh added.

“At the moment, I don't think that our growth plan will be severely hampered.”