By Sim Kok Chwee
SINGAPORE – Despite the expansion of low-cost carriers (LCC) in the region, SilkAir continues to remain strong, setting itself apart from the LCC market and leveraging its relationship with Singapore Airlines (SIA). SilkAir’s healthy first quarter operating profit of S$10 million (US$7.1 million) in the first quarter of 2008 represents a 78.6 per cent year-on-year rise.
SilkAir chief executive, Mr Chin Yau Seng, said: “SilkAir continues to hold its own on routes where there is competition from other carriers, not just LCCs.
“We remain focused on delivering great service, strengthening our brand positioning and expanding our business.”
By positioning itself as a quality regional carrier to both corporate and leisure travellers, SilkAir has differentiated itself from its LCC competitors. It also has to deliver on the service proposition for the SIA passengers it carries to regions beyond Singapore. With 40 per cent of SilkAir’s traffic derived from cross-feeding from SIA, its passenger make-up differs greatly from LCCs such as AirAsia and Bangkok Airways. AirAsia’s footprint is comparable to SilkAir in geography and boasts a greater intensity through its larger fleet. Its pure-LCC model however, attracts a customer base that is more price-sensitive and impulsive.
Bangkok Airways operates from Bangkok and Koh Samui, and markets itself as a “boutique airline” to differentiate itself from other Thai LCCs.
Even on routes competing directly with LCCs, SilkAir has fared well. SilkAir faced fierce competition from LCCs on the Singapore-Phuket route.
Jetstar Airways pulled out completely, while SilkAir boosted its frequency from 28 to 32 weekly flights in winter 2008/09.
While competition is expected to heat up, with AirAsia X and Bangkok Airways both expected to enter the Europe-Asia market, the outlook is still bright for SilkAir. With its pedigree parentage, its balanced mix of corporate and leisure clientele, and a strong presence in Indonesia, South India, China and the Mekong region, there will be plenty to celebrate for its 20th anniversary next year.
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