NORTH CHARLESTON – Coinciding with the delivery of the first ever Boeing 787-10 to Singapore Airlines happening earlier last week, the company’s CEO Goh Choon Phong held a free-wheeling, informal Q&A about the plans that the carrier has for growth and expansion under his reign.
When asked about the Dreamliner orders, Goh said that 49 787-10 are now on the order book, including the 19 that were converted into firm orders.
However, Goh said that they have the capability and the flexibility to convert some of these configurations into the -8 and -9 variants for Singapore Group carrier like Scoot if they so, please.Goh did not say whether he will be making any of these conversions.
Some of the Airbus A350 aircraft that the carrier are currently operating and on order will be sifted to regional routes due to strong demand across Asia.
In terms of the size of the medium/regional haul fleet, Goh did not say how large the fleet was going to be, but that it would be announced in a “separate press release” in the latter part of this year, obviously wanting to keep his cards close to his chest.
Asked about any potential interest in the new middle of the market aircraft (NMA) that Boeing is looking to produce, Goh showed some interest saying that “Boeing is in the process of sharing more details with us so we can look at it and see if it fits into our plans.”
He further added that this new NMA could fit into the Group’s low-cost subsidiary Scoot.
When asked about the decision not to roll out the new Premium Economy product on the 787-10s which was first introduced in 2016 on the 777s, Phong said these sort of regional routes are “more suitable for two class”.
Within this Dreamliner ceremony, there was focus placed by Phong on the first routes to Perth with the -10 aircraft, asked to outline how significant the carrier’s relationship is with the city, he responded:
“You’re probably aware that we’re a big operator in Australia. It is a very important market for us. We believe the 787-10 is very suitable for some of the Australian operations and Perth happened to be the first one that we look at. We look at the demand patterns, we believe that this aircraft of this kind of capability, as well as capacity, seems to be very suitable for the route. There will be probably more routes in Australia that will consider deploying this aircraft on”.
Asked how the 787-10 will fit into the carrier’s transformation strategy, Goh responded:
“You are all very well aware of the technology on the -10, which means that it is a very efficient aircraft for us to operate, which means that it is capable of making a lot of missions that previously might not have been viable. We strongly believe that this product is going to be unparalleled on those regional routes and that we will be able to attract more interest from our customers to want to fly with us on that plane”.
The conference then delved into which aircraft are going to be replaced when the -10s arrive. The older 777s, including the -200 variants will be phased out as well as the A330s that the Group has on lease currently.
Some of the A350’s medium haul configurations will also be part of some of the replacement plans as well. Goh gave no timeframe for when the aircraft is to be phased out. He said:
“The thing about the lease arrangement is also in part because give us flexibility. There is always a possibility for us to extend the lease. So if the market situation looks good and we are able to take on more capacity that then we will exercise that flexibility.”
The discussion then turned to the differences between Singapore Group subsidiary carriers Scoot and Silk. Goh demonstrated that LCC Scoot is better suited for leisure routes throughout Asia and the South Pacific, but that Scoot and mainline Singapore have swapped destinations between the carriers.
Silk has allowed Singapore, in particular, to penetrate mid-size markets in China with its high level of service and smaller gauge aircraft.
Moving away from the mainline Singapore Airlines perspective, Airways’ Chris Sloan asked about Scoot’s current performance in Hawaii as well as a whole.
Goh gave a lengthy explanation into the current success of the carrier:
“Scoot we think has been a success story. As you know, Scoot started off with medium-haul operations, and as we replaced some of the older 777 aircraft we use Scoot with the 787. It is now capable of longer-haul operations in a fuel-efficient manner, plus at the same time we acquires a hundred percent of the airline and now it’s consolidated under the same brand and same LLC. That gives us the capability for Scoot to do a lot more feeding connectivity through Singapore from the former TigerAir network, which means that it actually enhanced Scoot’s capability to actually launch more long-haul flights because it’s able to not just tap the Singapore market, but also the markets around Singapore that were previously served with the Tiger narrowbody aircraft. Yes, the short answer is that we will continue to explore more long-haul operations for Scoot and whether or not there will be more points in the US, we will be evaluating it and get the points has been determined we will certainly be announced”.
Goh also thinks that Scoot’s success in the long-haul LCC model (versus competitors like Air Asia X) is due to “Singapore’s deep understanding and experience of long-haul operations”, adding that network connectivity across the entire Group has “helped Scoot” connect to onward destinations.
Looking towards the competition with Air Asia X, Goh stated how they are competing with the carrier through Scoot:
“Scoot has at this point in time, 16 aircraft and we have four more to deliver for a total of 20 787s so we would continue to expand. Scoot is going to expand to twice its current capacity in five years, so it’s rapid. You wouldn’t be looking at all kinds of opportunities including routes that others might also be competing for more, but I could say we’re not too concerned about competition. If you have a look at a line that says, this is the LCC model and right the other end is the high end of the premium service, you’ll find that Scoot and SIA are at the opposite end of that continuum and that’s important because often times people are concerned about cannibalization when you have LCC and a premium. Scoot is long haul with its 20 787s and I have no concern about their capability ability to compete. By the way, it’s good, unit cost is more than 45 percent lower than the competitors.”
The next major milestone for Singapore will be the introduction of the Airbus A350-900ULR (Ultra Long Range), bringing back the famous nonstop Singapore-New York and Singapore-Los Angles routes which were discontinued in 2013, once the A340-500s were retired.
It is believed Newark will agin the destination of the world’s longest haul flight when it returns in late 2018, though an exact date isn’t been disclosed. Goh did say other destinations were being considered for the A350-900ULR sublet.
With United Airlines already operating the Los Angeles-Singapore route using a 787-9 aircraft, Goh showed no sign of weakness and said that “LA is a good market” and that United’s operations are “part of the competition we’re not afraid of so we will continue with the LA plan”.
A key issue that was presented to Goh was the current engine issues with the Trent 1000 from Rolls Royce. Carriers such as Virgin Atlantic and Air New Zealand have suffered problems over the past couple of months, resulting in the aircraft being grounded whilst a fix is being implemented.
When asked about his takes on the unscheduled maintenance of the engines, Goh responded confidently:
“Rolls Royce is an important partner for us as we have many Rolls Royce engines in our fleet. We also have a very strong relationship with Rolls Royce, they have set up technical facilities in Singapore. Regarding the issue with the engines, we have been in touch with Rolls Royce and have been working very closely monitoring the situation. So far, it hasn’t affected us but we’re not taking it for granted. We will continue to make sure that any potential impact will be minimised”.
Indonesia was another focus in the press conference, with Phong emphasising that growth into that country is very important to the carrier.
“We certainly want to explore how we can expand further into Indonesia. We’re actually very big in Indonesia. Given the number of 787s that we’ve ordered, you can safely say that at some point some of these aircraft will go to points within Indonesia” he added, highlighting that the 787-10’s focus again will be on the more regional and closer destinations.
Goh also went on to say that in the financial year of 2018/19, the carrier will be receiving eight 787-10s, meaning that he can begin and grow his regional network with these aircraft over the next 12-18 months.
Within this growth of the carrier comes the growth of their base, Changi Airport. Airport fees are to rise as a result of such growth.
When asked about this, Goh kept it short and to the point, without revealing too much: “As you know, the government or the CAG (Changi Airport Group) together with CAAS have done some consolidation so we’ve given our feedback to the government and I believe they will review it and then make a decision from there.”
Continuing on the topic of refreshing and refurbishment, the carrier is aiming to roll out updated lounges in Sydney, Heathrow, Hong Kong and Bangkok respectively.
Commenting on the refreshing elements, he said the following about Changi’s Terminal 3: “In some sense it was deliberate, we have this new concept for the lounge and we want to we think is good, but still we wanted to experiment and learn from lounges overseas so that all of this learning could then be incorporated when we launched and redo our flagship lounge. We are expecting to look at how to, what is it I wanted to do with our lounge in T3 starting this year, but the lounge is a huge project in T3. It will probably take a few years.” A timeline will be announced by the carrier in due course.
Looking into the future to the 777-9 aircraft that the carrier ordered back in 2017, Phong said that the aircraft will be a replacement for the current 777-300ER aircraft that will have aged by 2021/22 when the aircraft is due to be delivered.
He also emphasised how the transition to the -9 will be different because of it being a larger plane than the -300ER.
Goh said that the carrier went for the -9 because it has the right capacity, with the -8 being a little too small for their operational aims.
The 777-9 will have a First Class and will be part of what he calls a “conceptualization of what we can offer to our customers, meaning that you will be in a First Class that we believe when we launch it will again set industry standards to a new high”.
Finally, Singapore Airlines stressed their long-standing relationship with Boeing. With a relationship that spans over 45 years, the 787-10 delivery is yet another milestone the carrier has achieved with the manufacturer.
In Singapore’s current form, with the likes of Silk and Scoot under their aegis, the company seems to be on the cusp of an aggressive expansion plan to better compete with rivals in all segments.