SQ keeps Manila, cuts the rest of Asia

Singapore Airlines to keep its 3x daily B777 frequency
February 21, 2009

Singapore - The world’s largest airline by market value intends to keep Manila frequency as it is despite its announcement Monday on its plan to cut capacity by 11 percent in the year from April this year to March 2010 as travel and cargo demand wanes. The airline announces slash of its capacity after quarterly profit ending December fell the most in at least five years.

Singapore Airlines (SIAL.SI) remains bullish on the Philippine market as the only country in Asia Pacific registering positive growth in the industry mostly fueled by OFW movements. Traffic in Asia declined by 13.5% in December from the same period a year ago, and decreased by 3.4% in 2008 from the preceding year.The company has seen declining passenger demand and had already cut flights to various Asian cities.

"The drop in demand owing to the global economic slowdown is the driver of the reduction in capacity," says the airline. It adds that it "will continue to monitor demand patterns and will make changes to its network when necessary".

According to International Air Transport Association (IATA), Asia-Pacific passenger traffic sank 9.7 percent in December, while freight volumes tumbled 26 percent. The traffic declines for both passengers and freight were the biggest of any region, the trade group added.

Civil Aeronautics Board executive director Carmelo Arcilla said that CAB could not provide local data to validate the global scene, since it was still collating statistical reports from airlines but initial data indicate that the Philippines has yet to feel the full effect of the global financial crisis. Meanwhile, Secretary Ace Durano of the Department of Tourism reported on Thursday that the Philippines received 3.14 million foreign tourists last year, significantly lower than its 3.5 million target. Its annual growth percentage was however higher compared to the other Asian region which registered a negative growth. Durano said he expects the trend to continue and the industry to post a flat foreign tourists growth or possibly continuing decline in arrivals, but growing OFW deployment will fuel the industry's modest growth this year.

Singapore Airlines also announces a simultaneous cutback of its more than 120 widebody aircraft fleet from both Airbus and Boeing. Its cutbacks comprise frequency reductions across its network or downsizing of aircraft, for example 777-300ERs are replacing Boeing 747-400s on some services such as to San Francisco (via Hong Kong) and London Heathrow. The airline has 51 planes on order from Airbus and 21 on order from Boeing.

“We have not yet deferred any aircraft deliveries yet, but are examining options to do so,” said Stephen Forshaw, the Singapore Air spokesman. “Our deliveries of new aircraft are not just about growth, but also to adhere to our long-standing policy of fleet renewal,” he said.

Manila remains a top market for passenger traffic in Asia Pacific registering a growth rate of 11.9% based on Changi Airport data for 2008. It followed second to Vietnam at 17%. In the region, the sectors of Indonesia, Malaysia, the Philippines and Vietnam are the most active.

Four airlines have 9 daily flights between Singapore and Manila connecting more than 15,000 passengers a week.

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