By: Chew Choon Seng
© Law Kian Yan
The silver anniversary of Airline Business is an appropriate occasion for some thoughts on how the airline industry has evolved in the past 25 years.
The deregulation of pricing, which had taken root in the USA in the late 1970s, spread to Europe, and in the past decade also to Asia and the rest of the world. But liberalisation, in terms of freedom of entry and access to markets, is still bound tightly by constraints on foreign ownership and control. Practically no progress has been made in that regard in the past quarter of a century. Consequently, consolidation, which is badly needed for the industry to start earning its cost of capital, has happened only within national boundaries or within economic blocs.
Basic aircraft technology did not make the quantum leap that the move from turbo props to jets represented, although glass cockpits and fly-by-wire controls have become mainstream. Advances in airframes and engines have not been revolutionary but incremental; for example, in the use of new materials and in refinement of turbine design and engine management. The combination of high fuel prices and concerns about the environment has stymied interest in commercial supersonic transport, post-Concorde.
Progress has been more tangible in the application of technology to facilitate interaction with customers. The internet has enabled customers to communicate and transact directly with airlines, and airline websites have proved to be effective for direct marketing and promotions. Paper tickets have gone the way of dinosaurs. Applications for hand-held devices are in the take-off stage. Similarly, the period has seen financial and operating leases grow to be a significant component of airline business. Redefinition of what constitutes core airline activities has led to a rise in the outsourcing of business processes.
Through it all, airlines collectively were walking wounded, lurching from one crisis to another. Cumulatively, billions of dollars have been lost. Yet the industry is desirable and essential for the global village, providing connectivity for commerce and for political, social and cultural exchange, not only now but also in the future. However, it will not be self-sustaining until state protection and government intervention cease. Political will is needed to make decisions in the best interests of consumers and taxpayers, and treat airlines like any other commercial enterprise. Hopefully, it will not take another 25 years.
Chew steps down as Chief executive of Singapore Airlines this year and will become singapore exchange chairman in 2011. He has featured on the Airline Business cover twice, in 2004 and 2010.
"When Singapore Airlines was established in 1972, and at the time the population base must have been 2.5 million, few pundits would have bet on our growing to be among the 10 largest passenger airlines in the world. The day that we stop having visions or objectives to work to, then that is the day we atrophy.
"I can assure you that we have no intention of doing that."
Against a backdrop of mounting competition in Asia: When Singapore Airlines was established in 1972, and the population base must was 2.5 million, few pundits would have bet on our growing to be among the largest passenger airlines in the world.
COVER STORY: FEBRUARY 2010
FROM THE ARCHIVES
"Just as we competed with the established players, we must expect that others will compete with us and try to better us."
"That will keep us on our toes and keep our organisation vibrant and teach us never to rest on our oars. We must continue to grow against the tide."