SINGAPORE – Singapore Airlines (SIA) will not be increasing airfares to the point that it passes through the full fuel cost to passengers, SIA’s chief commercial officer Lee Lik Hsin said on the sidelines of the Group’s results briefing on May 15.
He was responding to a question by The Straits Times on whether airfares will continue to increase.
The airline noted that jet fuel prices have more than doubled since the conflict began, adding significant cost pressures to its business.
In its results filing for the financial year ended March 31, the Group noted that SIA and Scoot have already raised airfares across their network, but that “the adjustments do not fully offset the rise in the price of jet fuel, which is the Group’s single-largest expenditure item”.
Mr Lee told reporters that the question of airfares still goes back to the concept of demand and supply.
“We want to still be able to attract passengers, and in doing so, we have to be competitive and offer value. We have to factor that in very carefully as we price tickets,” he said.
That is why airfares have not been increased to a point where they fully cover the fuel price hikes, “because otherwise we will have no passengers,” Mr Lee said.
He added that current prices do not reflect the pass through of the totality of fuel cost increases, as customers will not accept it and it will hinder demand – which does not meet SIA’s business objectives.
Despite increasing fuel costs and the challenges posed by the Middle East conflict, SIA is increasing its capacity, by 13 per cent to Europe, while other airlines are cutting flights.
SIA chief executive officer Goh Choon Phong said: “Commercially, even right from the start, we were already looking at how we can better capture some of the displaced traffic through some of the ad hoc additional flights that we can put in within the capability of our resources.”
For instance, SIA ran ad hoc flights to London and Frankfurt when other carriers stopped flying the routes from Asia to Europe.
SIA is also launching flights to Madrid and a three-times-weekly service to Munich in October.
It will also add capacity to the UK, with expanding London Gatwick services. Together with its services to London Heathrow, SIA will operate up to six daily flights to the UK capital.
Mr Lee added: “Our financial position is strong, and therefore we are actually growing rather than cutting capacity.”
Chief operations officer Tan Kai Ping also noted that although the Middle East carriers have resumed some services, SIA remains bullish on its ability to tap some of the spillover customer flows that used to transit through the Middle East.
There are still the customers who change their plans and want to travel through alternate hubs, he said.
In response to questions on jet fuel supply, he said that fuel supply remains “stable” across SIA’s network despite the volatile situation.
He noted that if fuel supply runs short, there will be fuel rationing at airports, and that scenario is not happening now at the airports that SIA flies to.
Mr Goh said during the company’s presentation that SIA remains committed to supporting Air India’s transformation efforts, alongside its partner Tata Sons.
“We want to make Air India a world-class carrier and airline with an Indian heart,” he said.
He reiterated SIA’s multi-hub strategy as Singapore is a small market with a relatively small population base and no domestic operations for airlines.
Meanwhile, India is the world’s third largest aviation market and has a target to reach 230 airports by 2030.
Mr Goh said: “We’ve never had any illusions that it is an easy path. Way back when we started the joint venture with Tata Sons … I already knew at that point in time that it is a long game.”
He added that he told analysts and media back then that “this is definitely not going to be a walk in the park.”
“We have been operating in India for a long time, we know the market, we know how difficult it is. But we also had a sense, even way back then, that this is a market that holds tremendous potential, and today that potential is even more obvious,” he said.
Mr Goh noted that Air India faces the same issues that currently affect all airlines globally, but that it also faces three other factors that specifically hit the airline.
Air India was affected by the Pakistani airspace closures, the crash of AI171 which caused the airline to cut flights while it relooked processes, and the depreciation of the Indian rupee which is vital as a large part of any airline’s expenditure is in US Dollars.
But Air India has been very active in transforming itself, Mr Goh said, and has shown tangible progress.
When asked how long this process might take, Mr Goh said it took a decade for Vistara to establish itself as a leading carrier in India.
He added that some SIA staff were seconded to Air India to support it. But when asked about whether SIA will install one of its staff as Air India’s new CEO, Mr Goh said the Air India board is the one responsible for looking its the next CEO.
Air India is searching for a CEO after its former CEO Campbell Wilson resigned in April.
On the SIA side, the group is also harnessing generative artificial intelligence (AI) to improve operations, Mr Goh said. It has an AI-powered assistant and knowledge repository called Jarvis, with about 95 per cent staff penetration.
An AI-powered chat bot called Kris also provides customers with round-the-clock self-service support, from answering general enquiries to completing simple transactions.
SIA will also be unveiling next-generation seats in 2026 for long-haul flights across the various flight classes from First Class to Economy.
It will also launch a new KrisWorld in-flight entertainment experience, new in-flight dishes, amenity kits and updated soft furnishings and serviceware.
The rollout of these new cabin features is expected in 2026 as well.
SIA’s share price rose 2 per cent on May 15 at around 3pm to $6.40.
