Singapore Airlines is heading "back to business as usual" and riding a very strong wave of recovery, says a senior airline executive.
The airline, almost completely grounded at one stage early in the pandemic, kept staff and equipment ready for the rebuild and was able to get the jump on competitors.
Its senior vice-president, marketing planning, Jo-Ann Tan, says that between Singapore Airlines and regional subsidiary Scoot, the airline is operating at close to 70 per cent of capacity and will approach 80 per cent by the end of the third quarter.
The rebuild can be seen in this week's launch of "Early Bird" fares from New Zealand for next year, Singapore Airlines' first promotion of the discount fare types to more than 40 destinations since 2019 and a sign of confidence in the strength of its network.
Tan says pent-up demand, especially since earlier this year, is fuelling the recovery.
And Singapore Airlines is in a strong position to take advantage of it from its giant Changi hub.
"It's a case of pent-up demand and not every other carrier being able to come back on routes," says Tan. "We're benefiting from a very strong recovery with one of our highest load factors in the last quarter."
High demand for travel and the rapid restoration of capacity propelled the airline – which has more long-haul services to New Zealand than any other overseas carrier - to a big operating profit in the first quarter of the year.
The SIA Group posted a record first-quarter operating profit of $S556 million, ($650m), which was also the second-highest quarterly profit in its history.
Net profit was $S370m, up from a loss of $409m in the corresponding quarter to June 30, in 2021.
Tan, who has been with the airline for 23 years, says it also benefited from confronting a similar crisis when the viral respiratory disease Sars hit in 2003.
"We thought it would be very deep but what took us by surprise was how long it lasted - we were hopeful it would be a crisis for months, not years," she told journalists at a briefing in the airline's training centre near Changi Airport.
"Sars gave us a dry run in crisis management. We were ready to hunker down and determined we would be able to ride this through and so we took out the crisis playbook."
Bloomberg reports from 2003 say that in March of that year, as news of the Sars epidemic spread through Asia, Singapore Airlines began holding daily strategy sessions at 4pm to forecast the disease's impact on the airline, and in early April started cutting flights.
By the end of the month they had slashed Singapore Airlines' schedule by nearly a third, trimmed its fleet by 13 per cent and delayed the delivery of five new jets until 2006. Its roster of 6600 cabin crew took a week of unpaid leave every two months for the next year.
But the impact of Covid-19 turned out to be far more severe than Sars. Singapore doesn't have a domestic market, so in April of 2020 the group was operating at just 4 per cent capacity. From carrying 35 million passengers in the 2019-20 financial year, numbers fell to just under 600,000 in 2020-21.
The airline prioritised maintaining some cash flow, containing fixed costs and fortifying its balance sheet.
Since April 1, 2020 it has raised $S22.4 billion ($26.2b) in fresh liquidity through various measures including proceeds from rights issuance, bonds, secured financing and aircraft sale-and-leaseback deals.
"At that stage from a priorities perspective, we wanted to take care of our people - we were very fast in going out to the market raising cash, deferring expenses [and] we were one of the last airlines to right-size."
The Singapore Government – majority owner of the airline - paid out job support at times during two tough years but head count was reduced by 20 per cent.
The airline didn't let any pilots go because of the long lead time needed for retraining, but they took pay cuts and cabin crew in overseas posts bore the brunt of layoffs.
As of March 31, there were 22,000 staff in the group. Tan says Singapore Airlines now has about 7000 cabin crew but is rebuilding to pre-pandemic levels of 8000. New intakes are constantly doing their 14 weeks of training.
The airline had allowed crew to take second jobs during the pandemic and more than 2000 had also worked as volunteers serving as care, transport, safe distancing and contact tracing ambassadors in nursing homes and hospitals, as well as train stations in Singapore.
But throughout, the airline ensured it had crew and aircraft operating.
Just before borders started reopening towards the end of last year, the airline was operating 30 per cent of its network, largely for cargo, but using 50 to 60 per cent of its planes.
"That was because if we needed to activate we could do it very quickly. Every time we started thinking about projections and recovery, we started to bring planes back," says Tan.
This included getting aircraft back from Alice Springs, where it had stored some of its Airbus A380s which take about three months to bring back into service.
"That positioned us well for when we needed to do a very steep ramp-up. It was a matter of reading the market, taking a bit of a punt and bringing our planes back so we have equipment back ready to fly," says Tan.
She has had a broad range of senior management jobs at the airline. In 2017 she drove the company's transformation programme that initiated projects such as the integration of SilkAir into the SIA group.
CAPA Centre for Aviation analysis last month said Singapore Airlines was continuing its "remarkably consistent pace" of recovery, and while some Asia-Pacific airlines are now
catching up, SIA remains one of the region's front runners in terms of restoring its pre-pandemic capacity.
"Through much of the Covid-19 pandemic SIA was leading the Asia-Pacific region in reinstating capacity – in large part due to supportive government policies."
Singapore Airlines' experience mirrors that of other airlines. International Air Transport Association (IATA) full-year figures for 2021 show that demand – measured in revenue passenger kilometers (RPK) – dropped 58.4 per cent compared with 2019.
This year pent-up demand is driving a dramatic surge in passenger numbers. The May 2022 passenger figures from IATA show an 83.1 per cent jump compared to May last year.
Tan says the airline is seeing pent-up demand across its network with the exception of North Asia: China, Japan and Taiwan.
China's continued tough border restrictions mean it is flying one flight a week to just six destinations. Before the pandemic it flew to 20 points in China, and Shanghai was served with five daily flights.
She says Singapore Airlines is not trying to second-guess when China will relax restrictions, but it is scenario planning to ensure that important part of its operation will be ready when borders do re-open.
Other geopolitical factors brought more uncertainty. Following Russia's invasion of Ukraine, Singapore Airlines suspended its two flights to Moscow. The airline's flights have to skirt around the conflict zone, adding some time to European flights.
Capacity constraints at Heathrow during the northern summer forced some trimming of flights. "It has got very exciting to run an airline," says Tan.
Airfares – which have spiked as "revenge travel" peaked – are showing signs of levelling off. The airline's discounts in the market this week are an example of this, with fares for off-peak travel much closer to pre-pandemic levels, such as return tickets to Europe under $2200.
Speaking late last month, Tan said inevitably with more capacity coming back on stream, the supply situation will improve.
"Where airfares are going to go is probably a function of demand and your guess is as good as mine."
She says the continued impact of inflation is hard to pick, but while fuel prices were weighing on airlines, they have to be careful about passing all of these on.
Fuel affects airlines directly, but also has an impact on demand from consumers facing higher prices for everything they buy.
"Airlines have only been able to recover a partial amount of fuel increases in the past because of the competitive environment. Frankly, I don't think that is going to change."
Singapore Airlines places emphasis on its premium cabins, the area where carriers can make their best yields. Tan says premium demand is "a touch higher" than before the pandemic.
"We're seeing that with leisure and revenge travel, people are willing to spend a little bit more because they have had two-and-a-half years of savings." Some are also willing to spend more for more space because of health fears.
While the corporate market had been slower to recover, anyone who thought corporate travel was dead was "quite wrong".
To better cater to the premium market, the airline has revamped all its flagship lounges at Changi, spending $S50m on an overhaul that has transformed them.
Singapore Airlines has flown to New Zealand for more than 45 years and maintained services throughout the pandemic.
From April 2020 to January 2022, SIA operated more than 1700 passenger
services, helping to bring close to 37,000 people back to New Zealand, the vast majority being returning Kiwi citizens.
It also flew more than 45,000 expats living in New Zealand to their home countries.
Cargo in the belly of planes included fresh food exports and imports of essential supplies such as PPE and 14 shipments of 1.6 million Covid-19 vaccines.
It now operates 14 services a week from Auckland and Christchurch to its hub using an Airbus A350-900, and commercial partner Air NZ operates daily services between Auckland and Singapore. From the end of October, Singapore Airlines is bringing its Boeing 777-300s back to the Auckland route. The aircraft has four first class seats.
Tan says beyond that, it is a matter of "watch this space" for New Zealand, which now has relaxed masking rules in line with changes introduced in Singapore last month.
"We always maintain flexibility with deployment. We are certainly reviewing for next year but we need to prioritise where we put capacity so we have the best possible economic outcome."
Pre-pandemic, the airline flew A380s into Auckland – with suites - but with the airline's double-decker fleet reduced from 19 to 12 these are being used on other routes with higher population density, and where airports have more pressure on capacity.
"Given that Auckland is not slot-constrained, it would make more sense to add frequency rather than put in a lot of capacity with one tranche."
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