Singapore Airlines (SIA) – arguably among the world’s best-run, most profitable major airlines in the past – has announced a whopping loss for the April-June quarter of this year, blaming the world economic crisis, the H1N1 pandemic and losses on fuel hedging.
Not mentioned by the airline, but possibly another factor, is an ongoing boycott by Indian travel agents furious at having had their 5% commission on ticket sales cancelled. The boycott has been going on since the end of last year, and means that anyone in India wishing to travel by SIA can now book only at the SIA offices there, or online. Lufthansa and British Airways, too, are being boycotted for the same reason.
SIA recorded an operating loss of S$271 million for the second quarter, compared with a profit of S$265 million in the the same quarter of 2008. To offset the loss, the airline has instituted a freeze on hiring, stopped paying salary for those on leave, cut wages and postponed “non-essential” projects.
It estimates that the cuts in manpower costs will result in savings of S$60 million in the current financial year.
Part of the pressure on SIA comes from budget airlines, such as AirAsia, which – in contrast – has seen passenger numbers climb 24% to 3.5 million in the past year. Profits, too, have risen, to RM657 million, an increase of 8%, despite fares being cut by 19% overall.
AirAsia has also seen a hefty rise in ancillary income, to the point where inflight sales of drinks, meals and merchandise now represent 14.5% of passengers’ spending.
Even AirAsia is not without its troubles, however – it could face sanctions for an incident on August 9, when the airline rescheduled a flight from Polonia Airport in Medan, Indonesia, from 7:10pm to 11am the next day. Furious passengers rioted, vandalising airport facilities.
It was not the first time an AirAsia flight had been postponed. Polonia Airport manager Rajali
Abubakar was quoted in the Jakarta Post as saying that the airline regularly postponed flights, leaving
passengers stranded at the airport for hours.
