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SIA: Time to reinvent?

In recent months, Singapore Airlines posted a shocker to the public: its first quarterly loss in more than two years, a 69% year-on-year drop from last year’s results and a loss of SG$38.2 million. Marketing asks experts if it is time to step back and rework its image.

According to a Reuters report, this was caused by rising fuel costs and slower cargo and passenger volumes on routes to Europe and the US.

SIA is also facing competition from middle-eastern carriers such as Emirates and Qatar Airways for the premium market.

“Promotional activities necessitated by intense competition among airlines are expected to place downward pressure on passenger yields, especially in Europe and the United States. Fuel prices are expected to remain at high levels, which will adversely impact the group’s operating performance,” said SIA in a statement.

Said brokerage house UOB KayHian in its report: “The results highlight SIA’s lack of pricing power and erosion of brand value. The decline in yields appears to indicate the brand differentiation that SIA has enjoyed has finally eroded.”

SIA has also missed analysts’ earnings forecasts for five consecutive quarters.

With Scoot to launch in July and the group indicating its intentions to leverage SilkAir’s network of cities, how should it position itself in this new era and does it need to re-look its branding?

Sarah Reiter, chief executive officer, Southeast Asia FutureBrand said SIA’s strategy said: ‘Through ownership stakes in low-cost carriers Tiger Airways and Scoot, along with SilkAir, Singapore Airlines Group captures customers from low-cost to premium and short-haul to long. Moving forward, it must carefully manage these brands to ensure they support rather than cannibalise each other.”

Reiter suggests a reassertion of SIA’s premium positioning and a consideration of the Singapore Girl to ensure the brand’s relevance with tomorrow’s premium passengers.

Luke Lim, chief executive officer, A.S. Louken feels that SIA’s diversification into various sub-brands has been effective in capturing new market share with little erosion of SIA’s brand identity as a prestigious global airline. “Intensifying competition from other premium airlines will pressurise SIA to lean towards further developing its sub-brands.

However, SIA must not be distracted, but fortify its positioning as a prestigious airline. This means pushing new frontiers towards creating world-class flight experiences,” said Lim.

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