Air Transport World

Global powerhouse.(PROFILE)(Financial report)

WHEN SINGAPORE AIRLINES launched the world's first A380 service with a flight from Singapore to Sydney on Oct. 25, it was more than the first commercial flight of the world's largest passenger airplane: It was an undeniable sign that there has been a seismic shift in the aviation world's center of influence in the 60 years since SIA took to the air as Malaya Airways Ltd. with three destinations. SIA no longer is just a major player in the Asia/Pacific region and a "great way to fly" but a global force that influences the direction and style of air travel everywhere it goes.

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With that influence comes higher risk as it faces increasing competition from airlines that have embraced its business model in places like Dubai, Qatar and Abu Dhabi and from low-fare carriers eager to carve out a slice of its market in Southeast Asia. Still, SIA has met and overcome more than its share of challenges in the past decade including the Asian currency crisis, Indonesian forest fires, SARS and the bird flu. Over that period, it never failed to make money. Actually, since its rebirth as Singapore Airlines in the early 1970s, it never has had an unprofitable year.

Some carriers argue that SIA enjoys an unfair advantage owing to the fact that, while a public stock company, it is majority owned (55.24%) by the government through Temasek Holdings. The reality, however, is that long-term success and state control rarely go hand in hand and SIA has led the airline industry for years with such innovations as free drinks and headsets back in the late 1960s, satellite phones in 1991, seatback videos for all passengers in 1995 and audio/video on demand in 2001.

Its global strategy has been shaped by the Singapore government's embrace of open markets (the Kuala Lumpur-Singapore market is a glaring exception) and its own dogged pursuit of investment opportunities in other parts of the world despite a mixed record. It has endured the rejection of joint venture or partnership overtures in India, Thailand, Taiwan, South Africa and Australia. Where it succeeded--with Air New Zealand in the 1990s--it ended up taking a huge writeoff to get out of ANZ in 2001.

Nor is it easy to see what benefit has accrued to SIA through its acquisition of 49% of Virgin Atlantic Airways in March 2000 for [pounds sterling]600 million. It reportedly is ready to dispose of its stake if the right terms can be arranged, particularly now that the recent Singapore-UK open skies agreement will permit it to fly the North Atlantic from the UK in its own right. …

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