SIA’s product upgrades falter as airline competition heats up

It’s digging deep into its arsenal.

If Singapore’s flag-carrier hopes to stand a chance against a torrent of long-haul and short-haul competition alike, it must exert every effort to stand out.

According to analysts from CIMB, among Singapore Airlines’ competitors include long-haul competition to Europe from the Middle East Gulf airlines, long-haul competition to North America from the North Asian airlines, and short-haul competition from the Southeast Asian low cost carriers.

CIMB says SIA has since executed a full-throated response to the competitive threats around it, including constantly upgrading its products, diving wholeheartedly into the low cost business, venturing into India, dramatically expanding its codeshare, and JVs with other airlines.

However, these efforts still seem to be lacking.

“Unfortunately, none of these moves have been able to deliver a structural and permanent lift to earnings, which have hovered at relatively low levels since 2011,” CIMB said.

“The competition facing SIA in the long-haul segments to Europe and to North America is expected to continue rising, and we can see Middle East Gulf carrier seat capacity to Europe and North Asian airline seat capacity to North America still increasing in the first six months of 2016,” CIMB added.

Despite this, CIMB adds that one upside is that short-haul capacity within ASEAN is growing at much slower rates, while LCC penetration rates in Singapore have stagnated, and this is helping SilkAir deliver stronger yields and earnings.

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