Singapore Airlines' Competition Rises

Singapore Airlines has long been known for its iconic Singapore Girls, the demurely smiling stewardesses whose beauty and in-flight pampering harken back to a day when aviation was glamorous—and profitable. That allure, made famous in ads, drew high-paying premium-class flyers to Singapore Air, which in 2006 became the airline with the highest stock market value in the world. Thanks to belt-tightening by business travelers and the rapid growth of Middle Eastern airlines intent on offering even more in-cabin luxury, Singapore Air’s passenger count has fallen 12 percent since 2008—the biggest drop among 12 major full-service Asia-Pacific carriers. Air China overtook it in 2009 to become the world’s most valuable airline by stock value. Even worse, Singapore Air, which hasn’t recorded a full-year loss since it went public more than a quarter century ago, on May 10 reported red ink for the first quarter and slowed capacity growth at its flagship unit. “The fact is that they’re hurting,” says Peter Harbison, executive chairman of CAPA Center for Aviation, a Sydney-based company that advises airlines. “There’s good cause for a fundamental review of Singapore’s strategy.”

The carrier, controlled by Singapore state-investment company Temasek Holdings, reported a loss of S$38.2 million ($31 million) in the three months ended March 31, compared with a S$171 million profit a year earlier. That followed five straight quarters of declining earnings. The company’s yields, a measure of average fares, are “under pressure” as competition forces it to keep prices low, Goh Choon Phong, Singapore Air’s chief executive officer, told reporters on May 10.