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Updated: Aug 01, 2022 08:28 IS
By Lee Kah Whye
Singapore, August 1 (ANI): Tue Singapore Airlines Group (SIA), co-owner of Indian airline Vistara, last week reported its highest-ever operating profit of 556 million SGD (403 million USD) for the first quarter on “increasing passenger demand”. It’s the second-highest quarterly operating profit in the airline’s history.
That comes after it scraped into positive territory with a profit of SGD10 million (US$7.2 million) for the second half of its last fiscal year when it announced its full-year earnings in May. It reported an operating loss of SGD 620 million for the first half of the same financial year. The SIA’s financial year runs from April to March.
SIA Group reported a net profit of SGD370 million (US$268 million) for the first quarter versus a loss of SGD210 million in the last quarter of the previous fiscal year, an improvement of SGD580 million. The airline attributed this to better operating performance, up SGD 623m, and an absence of SGD 66m in non-cash impairments, partially offset by tax expense versus a SGD 95m tax credit last quarter.
A smaller proportion of related company losses such as Vistara also improved its performance by SGD 25 million.
SIA entered the quarter ahead carefully calibrating its response to the pandemic and preparing for rising demand.
In a statement, SIA said: “Since the beginning of the pandemic, the SIA Group has proactively reviewed all aspects of our operations to ensure the entire organization is ready to respond quickly to changes in the operating environment.
Singapore Airlines and Scoot have been among the first airlines to offer services and start selling at points served from Changi Airport since the start of the easing of restrictions in September 2021. Group capacity increased from an average of 47 percent of pre-pandemic levels in Q4 FY2021/22 to 61 percent in Q1 FY2022/23 to take advantage of significant pent-up demand.”
Unlike in Europe, where airlines have had to cut flights to meet travel demand, SIA is increasing the number of flights.
With travel demand increasing, the industry in general is in a situation of being unable to hire and train workers quickly enough after shedding thousands of workers during the pandemic. It is also not possible to get mothballed aircraft back into service quickly enough.
In early July, British Airways said in a statement to NBC News that it would cancel 10,300 more short-haul flights by the end of October. It added: “British Airways will cancel more flights in the crucial summer holiday months as airlines and airports across Europe struggle to keep up with heavy demand from holidaymakers in the wake of the pandemic. The entire aviation industry continues to face major challenges and we are fully focused on building resilience into our operations to give customers the peace of mind they deserve.”
Similarly, KLM and Lufthansa also made statements to their customers that they have to cut flights to ensure reliability and service security. The reason for this is the labor shortage not only among the airlines, but also among partner service providers at airports.
“With the start of summer in the northern hemisphere and the almost complete lifting of global travel restrictions, everyone involved in air transport worldwide is reaching the limits of the currently available resources almost every day.” Air transport system from almost zero to almost 90 percent is clearly not going with the reliability that robustness and punctuality that we would be happy to offer you again.”
Dutch airline KLM said: “Work pressures at the airport are unrelenting at the moment as both Schiphol and KLM face staff shortages. The measures taken by KLM are aimed at restoring operational stability and thereby relieving the pressure on the employees at Schiphol and KLM. Until August 28, we will be canceling 10 to 20 round-trip flights to European destinations every day.”
The reduction in flights in Europe and increasing demand has meant airfares have skyrocketed.
A search of August flights on airline websites revealed that an economy round-trip ticket from Singapore to Munich with Lufthansa costs $1,600, while an SIA ticket from Singapore to London costs almost $3,000. These cost about $900 before COVID.
This benefited the better prepared Singapore Airlines, which is busy adding flights to its network.
In its statement on the financial results, it said that SIA and low-cost subsidiary Scoot are adjusting their networks for the Northern Winter operating season (October 30, 2022 to March 25, 2023). SIA will increase connections to points across Japan, bring its Indian network back to pre-pandemic levels, add more flights to Los Angeles and Paris, and continue its direct services to Vancouver. Scoot will introduce non-stop flights to Tokyo (Narita) and Osaka, as well as add more flights to Bangkok, Cebu, Manila, Seoul and Surabaya. Group capacity is expected to increase to around 68 percent of pre-pandemic levels by September and around 76 percent by December.
Earlier this month, SIA announced that it plans to gradually bring all of its flights in India back to pre-pandemic levels by the end of October. It will gradually increase its flight frequency and operate 17 weekly connections to Chennai from the current 10 flights per week. Connections from Kochi will be increased from the current seven flights a week to up to 14 times a week. Bengaluru flights will operate up to 16 times a week, up from the current seven flights a week.
SIA expects travel demand to remain robust in the short-term and forward sales to remain buoyant over the next three months to October 2022.
However, she warned: “Inflationary pressures, including higher fuel prices, remain a concern. Interest rate hikes and slowing economic growth in many countries around the world, including SIA Group’s key markets, are risk factors for the recovery in passenger travel and air cargo demand, which we are monitoring closely.” (ANI)
