SINGAPORE: Singapore Airlines (SIA), the world's second biggest carrier by market value, may need to relook its premium class-dependent business model, if it is to turn around from its current losses.

Analysts said this is because consumption patterns have changed the picture of an industry that is unlikely to return to pre-crisis levels.

SIA flew into the red on Thursday, with its first quarterly loss in six years. Japan's ANA and British Airways also announced first quarter losses on Friday.

Market watchers said while there are some signs of bottoming out, real improvements in passenger and cargo numbers are expected to be gradual and will only start next year.

SIA, which warned that it is facing its first potential annual loss since going public, said it may consider further capacity cuts if demand slumps further, although it reiterated that laying off staff remains a last resort.

Going forward, SIA said it does not expect a rapid recovery but a prolonged period of difficult times.

Asia editor, Flight International, Siva Govindasamy, said: “Their main business model hinges on three main things - the premium business-class seats, the long haul market, and cargo market. And unfortunately for them, the economic crisis has resulted in all areas being badly affected."

For a carrier which has no domestic market to fall back on, a wide-bodied fleet, which means more seats to fill, and a premium class that is not making enough money, analysts said SIA has to make changes.

Aviation analyst, Standard & Poor's, Shukor Yusof, said: "We were surprised to see that break even load factor has risen to just over 84 per cent, which is about 10 percentage points increase. What this means is that they are taking in more passengers but yields are getting lower.

"SIA is a luxury carrier. They may have to look at becoming a normal carrier instead of a luxury carrier. If previously, they were catering to mostly business and first-class passengers, (now they have to) find a niche between economy and business-class."

In the meantime though, what the carrier has is a strong cash position.

- CNA/yt