SATS celebrates as prodigal customer Jetstar returns to the fold

After disastrous contract with ASIG.

Ground handler SATS is in a celebratory mood after winning back the trust of its customer Jetstar. The carrier had previously defected to ASIG, a new ground handler attempting to enter the Singapore market.

According to Maybank Kim Eng, Jetstar has reappointed SATS as its ground handler. This comes after ASIG terminated its contract with Jetstar, its only airline customer.

Jetstar left SATS to become ASIG’s first customer only in October 2014, but the new ground handler’s first day was disastrous: operational hiccups led to delays, cancellations and luggage issues that affected more than a thousand Jetstar passengers.

“We expect higher contracted service fees. We believe that strategic implications are bigger positives. Firstly, the new ground handler’s lack of experience in Singapore is likely to deter other airlines from switching. Secondly, ASIG could potentially exit the market. If so, this would ease the pressure on rates. Lastly, any exit by ASIG would underscore the difficulty of penetrating the Singapore market and possibly daunt the entry of future new players. SATS, together with Dnata, could then keep their duopoly and reap the full benefits of Changi Airport’s longterm growth,” said Maybank.

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