Air Transport World

Airline products: Singapore Airlines used aircraft sales program.

Singapore Airlines operates the most modern fleet of jet aircraft in the world, bar one. As of March 31, 1983, the average age of their fleet was only 39.7 months as compared to other major carriers, such as Pan Am who maintains a fleet averaging 12 years of age.

As part of its Five Year Plan, SIA projects a fleet of 23 Boeing 747s, six Airbus Industrie A310s and four Boeing 757s by 1988. Fourteen of the 747s will be the new stretched upper deck models and the remaining nine the Super-B type. The new A310s and 757s will replace the six Airbus Industrie A300s, two Boeing 727s and three McDonnell Douglas DC-10s now in service. SIA is the only airline in Asia introducing three modern generation aircraft at once.

In part, this modernization plan is self preservation and in part good business sense. Singapore is an island of only 616 sq. kilometers with a population of less than three million. Unlike many of its competitors, it cannot sustain its traffic base from the local population alone. Singapore Airlines generates taffic through its marketing image and service performance. New equipment is the key to maintaining its reputation. Also, from an economic standpoint, Singapore has had the resources to capitalize on the lull in aircraft sales these past few years and the battle between Boeing and Airbus for market dominance.

Despite rising cost, SIA has managed to produce almost half a billion U.S. dollars last year in internally generated cash flow. More than one-third of these funds go to improving the company's equipment, facilities and support hardware. Based on this performance, SIA has been able to leverage the purchase of new equipment at the expense of its competitors and the manufacturers.

In December 1981 Singapore Airlines placed an order for six A300BA-200 aircraft. In October of 1982 they cancelled two A310-200 orders. The two remaining brand new A300 aircraft were traded in to Boeing.

Between 1979 and year-end 1983 Singapore Airlines has sold 36 used aircraft. Given the condition of the used aircaft market at the time, this is a phenomenal record. But several factors were working in favor of SIA. First, it is almost unfair to term these aircraft "used." It is probably better to refer to them as "previously owned," to use the euphenism of one of the better class of car manufacturers. Second, these aircraft were very low-time and well maintained. SIA projects their operational aircraft life at between five and eight years as opposed to the 12- to 15-year life used elsewhere in the world. And lastly, because of the high depreciation rates the aircraft were low-cost compared to other pieces of equipment on the market. …

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