SIA to slash capacity further

Singapore - Singapore Airlines (SIA) said it plans to cut capacity by another 11% from April and is in talks with various unions on measures that will affect staff. The announcement follows plans to suspend its Vancouver service indefinitely.

The Singapore national carrier said it regrets the suspension, after serving Canada for over 20 years. In a statement, the carrier said "the economic conditions and performance on the route has been badly affected by the global economic downturn" and explains that the suspension of the thrice-weekly service is part of the airline's attempt to ensure capacity is matched with current demand.

Singapore Airlines booked a 42.8% drop in net profit in the fourth quarter of 2008 over a year ago, along with other airlines reporting losses in light of slowing demand for travel.

The carrier said it will continue to serve Canada via its existing schedule of 42 weekly flights between Singapore and its North American gateways - San Francisco, Los Angeles and Houston, as well as both Newark and JFK Airports in New York; then onwards to Canadian cities using the services of its Star Alliance partner airlines in North America.

The last flight for the service will be 25 April 2009. Customers holding tickets for flights after this date will be eligible for a refund, without penalty or fee, for unused travel.

Further capacity cuts planned for 2009

SIA also said it was to cut capacity by a further 11% in the coming financial starting April 2009. This includes 17 aircraft decommissioned from the operating fleet.

SIA CEO Chew Choon Seng said: "The drop in air transportation has been sharp and swift. Given the falls of over 20% that we have seen recently in air cargo shipments, and the tradition of demand for air travel following closely behind trends on the cargo side of the business, we have to face the reality that 2009 is going to be a very difficult year."

Singapore Airlines previously cut all-Business Class Singapore-Los Angeles and Singapore-Newark routes by two flights to five weekly flights on each route.

"We don't want to be flying half-empty planes around the world any longer than we have to because it increases our cost burden at a time when we can least afford that," said SIA spokesperson Stephen Forshaw.

"Changes to capacity throughout the network will continue going forward, in an effort to better match capacity with demand, in view of the economic downturn," the company said. 

Management first to take pay cut

Chew said the company has considered the capacity to be operated that will enable the airline to remain viable in a shrinking market, but the removal of surplus capacity will result in redundant resources and will draw sacrifices from the company.

As a result, SIA said it is engaging the unions on measures that will affect staff. These measures include accelerated clearance of leave entitlements, voluntary leave without pay, voluntary early retirement and shorter work months. It added that should there be cuts in salary, the management will be first to take them. 

"We have already taken action such as expanding and stepping up training and re-training programmes and we will contemplate retrenchment only as a last resort, but we do not have the luxury of time and we need to agree and act on some measures quickly so that we can push back the point of retrenchment as far as possible and improve our chances of avoiding it altogether," Chew said.