Singapore Airlines (SIA) is continuing to add subsidiaries, joint ventures and partnerships to its portfolio to meet the challenge of stiffening international competition on the Kangaroo route and in Southeast Asia from Gulf-based and other regional airlines.

The transition has taken SIA from being focused solely on the full-service market in recent years into the low-cost segment. The group now operates 186 aircraft and as of July flew to 280 destinations in 70 countries, almost twice the size of Emirates’ network.           

“We are making significant investments in a wide range of strategic initiatives to address these challenges and better position the SIA Group for the future,” CEO Goh Choon Phong said earlier this year in the company’s latest Sustainability Report. “Many of these new initiatives have been implemented over the past year.”

SIA is frank about the challenges faced, which not only include the Gulf threat, but also other global trunk-route players, the low-cost battle, which is as acute in Southeast Asia as anywhere, and the Singapore market’s maturity, which has slowed growth. It is investing heavily, and establishing hubs away from its base.

Tigerair has seen strong load factors of greater than 80 percent in all but one of the past five years, but has suffered operating losses in three out of the past four financial years. On November 6, SIA announced the latest step in its strategy, the intention to take full control of the low-cost carrier, in which it already has a 55.8 percent stake, to stem losses.

This would add to existing wholly owned subsidiaries Singapore Airlines Cargo, the full-service SilkAir, low-cost Scoot and SIA Engineering.

“These are the main operating companies in the group. We have many other investments, but these are the core areas we are operating in. Most of the contribution from the group still comes from SIA and SilkAir in terms of the percentage of passenger revenue,” Nicholas Ionides, divisional v-p, public affairs for Singapore Airlines told AIN during an interview here in Singapore late last year.

“But the others are growing, and the reason we have investments in them is because they are emerging segments of the travel market and we feel we should have a role in it to complement the rest of what we have.”

SIA also has a 49 percent stake in Indian airline Vistara, which launched services in January 2015. It seeks to tap into India’s domestic market, as well as west-bound traffic flows when international flights become available. “It is a joint venture between us and Tata, the biggest conglomerate in India. It has eight aircraft now,” he said.

“Because India has a law that says that Indian airlines must operate for five years and have at least 20 aircraft before they can fly internationally, we are appealing to the Indian government to remove those restrictions, because we think that it holds back development of the Indian market.”

As a long-haul low-cost operating widebodies, Scoot is almost unique. It started three years ago with Boeing 777s, but is transitioning to a Boeing 787 fleet. It seeks to tap into China and Australia. SilkAir is a regional airline that provides feeders into the SIA network.

Singapore-based Tigerair is an LCC in the more traditional context, with a single narrowbody aircraft type, the Airbus A320. SIA’s investment in Thailand is through low-cost NokScoot, which is 49 percent owned by Scoot and 51 percent by Thai interests.

SIA’s partnership with Virgin Australia, a 22.8 percent stake, began in 2011. The partnership is designed to ensure the group remains a strong Kangaroo route competitor.

“On our own we fly to seven points in Australia. With Virgin Australia, we can fly to another 40 through codesharing. Passengers are connecting as well to the hubs that we serve in Australia, and then through the Singapore hub.”

He said that in addition to Virgin Australia, Air New Zealand customers were flying on SIA to the Singapore hub and travelling on to many other parts of the world.

“We have five flights a day from Sydney to Singapore. We have four flights a day from Singapore to London. The combinations can be very strong. Minimum connection time is less than an hour,” he said.

“It’s very important that we remain efficient in Singapore, that the connections are very good, in order to give people a choice. When we are expanding our network, it’s not solely about new routes, although routes are important as a part of hub development. But it’s also about increasing frequency and ensuring that timings are very good.”

He said the group’s strategic initiatives were focused on addressing competition of various forms. “The reality is that we’ve had competition on every route that we’ve operated on since day one. Competition is not new. The Middle East carriers are certainly strong competitors, but they are not the only competitors we are looking at,” he said.

 “If you look at the Australia-Europe market, we’ve been a major player in that for all time. We remain a very strong competitor. You also have airlines in Hong Kong, China, Thailand, Kuala Lumpur and other parts of Asia which are also tapping into the Kangaroo route traffic.”

SIA has nine flights a day from Jakarta to Singapore, the most in its network in terms of single-destination frequency. Not all of those flights are sustained solely by point-to-point traffic: many people only fly the first leg because of the availability of a second. The group also flies to 13 points in India and 24 points in China.

“We have partnerships with Air New Zealand, Scandinavian, and we announced a joint-venture agreement with Lufthansa [in early November], to share revenue on flights between Singapore and points in Europe. Partnerships are very important for us. You don’t need equity necessarily in order to have a partnership.”

The SIA Group’s order book is almost as large as its existing fleet. “Our policy of maintaining a young and modern fleet means we are very often in the market for new aircraft. As a group, we have something like 160 aircraft on firm order right now. That includes SIA, SilkAir and Scoot. The subsidiaries are growing quite effectively,” he said.

Ionides put total Singapore Airlines fleet size at 107, with an average age of seven years, three months. “The figure is generally around 105. It’s not a static number.”

As of November 30, Singapore CAA data showed that SIA had 19 A380s, 59 Boeing 777s (27 of them -300 ER variants), as well as 31 Airbus A330s. SilkAir’s transition from the A320-type (15 aircraft) continues, with fourteen 737-800s now in the fleet. In addition to two 777-200s, Scoot operates three 787-8s and six 787-9s. SIA’s cargo arm runs eleven 747-400Fs.

SIA hopes to take delivery of its first A350 in February. It has 67 A350-900s on order (and it had seven A350-900 ULRs on order but these have since been cancelled). It also has a further batch of A380s expected in 2017.

“[SIA] had an order for twenty 787s, split 10-10. We transferred that order to Scoot. They have been ramping up their 787 fleet. SilkAir has orders for 50-plus 737s. They are transitioning from an A320 to a 737 fleet and are about halfway through that process.

“We have a portfolio strategy which gives us an interest in both the full-service and budget elements of the market. We have short-haul and medium long-haul. Tiger and Scoot provide [synergies] to each other at the budget end, and SIA and Silk Air [allow] feed-through to each other at the premium end,” he said.

“It works for us because we are differentiated: very premium at one end and budgeted at the other. We limit cannibalization. It’s not something that works for everybody, but it works for us.”