Singapore Airlines’ regional carrier SilkAir will focus on expanding its network and improving its product and services to stay ahead of the competition in Asia.
In the first half of its 2013-14 financial year, the carrier increased its capacity by 14%. Its operating profit, however, fell by 41% to S$21.8 million ($17 million) as demand failed to keep up with the increase in capacity.
“2013 was a challenging time for us as our performance was affected,” chief executive Leslie Thng told reporters at a press conference in Singapore.
"We've increased capacity quite aggressively, for two reasons. One is we feel that within this region, especially in our key markets China, Indonesia, India, the economy is still relatively strong. The size of the middle income passengers has also grown tremendously. That’s why we injected capacity into these markets. We also inject capacity sometimes because of opportunities... for example liberalisation of air services agreements.”
Its vice-president of commercial Ryan Pua adds that the carrier plans to add one to two more destinations in China and India to its network this year, and is working to secure slots.
Last year, SilkAir added three Indonesian destinations – Semarang, Makassar and Yogyakarta – to its network. It also recently announced plans to launch services to Kalibo in May, followed by Mandalay in June.
This year, the carrier will also be taking delivery of eight Boeing 737-800 aircraft and retire four of its oldest Airbus A320s. The plan is to transition to an all-Boeing fleet by the end of the decade, while increasing capacity by double-digit percentages annually.
The carrier is also trialling a wireless in-flight entertainment system on one of its A320s. It is partnering with Panasonic Avionics for the trial, which enables passengers to stream a variety of multimedia content directly on to their personal electronic devices while onboard.
Thng says the carrier is aiming to implement this system across its fleet by the end of 2014, improving its product offering for passengers.
Currently half of its passengers come from connecting traffic via parent Singapore Airlines. Approximately 70% are leisure travellers, while the remaining are business passengers.
When asked about the increasing competition from low-cost operators in the region, Thng says: “SilkAir believes the full-service model has value and a position in the market and we’ve been resilient in the past years.
"LCCs [Low-cost carriers] have created additional competition, no doubt, but at the same time they've also created new market segments for themselves. What we have done is to concentrate on what we think will be the appropriate value proposition for our consumers and work on it and target the appropriate market segments.”