COVID-19: Meeting new travel demands among focus of Singapore Airlines' newly created task force

COVID-19: Meeting new travel demands among focus of Singapore Airlines' newly created task force

Changi Airport 14
A Singapore Airlines travel advisory at Changi Airport Terminal 3. (Photo: Jeremy Long)

SINGAPORE: COVID-19 will change the world’s jet-setting ways, with health and sanitation concerns likely to remain top on travellers’ minds even in a post-pandemic world.

Meeting these changes will be among the focus of a new task force set up within Singapore Airlines (SIA), said its chief executive officer Goh Choon Phong on Friday (May 15), as the national carrier reassesses its operations and maps out how it can emerge from the ongoing pandemic.

“We need to look at … what kind of travel experience should we offer to our customers, knowing that coming out of COVID-19, there will be a lot of concern over health and well-being,” said Mr Goh.

“We got to make sure we address those concerns that our customers will have.”

READ: Singapore Airlines posts first annual net loss in 48-year history after COVID-19 cripples demand

READ: COVID-19: Mandatory for SIA, SilkAir and Scoot passengers to wear face masks on board, observe safe distancing

At the moment, all passengers on SIA, SilkAir and Scoot flights are required to bring their own masks and wear them throughout the flight. They also have to observe safe distancing measures when embarking and disembarking, as well as when queuing for the lavatory.

Other specifics on how the future of air travel might be are still being examined by airlines and global authorities on their practicality and how they can be implemented both on the ground and in the air, said executive vice-president of operations Mak Swee Wah.

“(But) safe to say, it will not be the same as the pre-COVID situation,” he added.

In response to a question on whether air ticket prices could go up with safe distancing measures being rolled out on planes, executive vice-president of commercial Lee Lik Hsin said air fares were “a function of demand and supply” and that SIA will adapt accordingly when it restarts its services.

He added that the efficacy of social distancing measures on planes was "still not determined at this time”.

"There are many discussions ongoing between (the authorities and airlines) … but it is too early to make an announcement on this."

READ: COVID-19: Safe distancing on aircraft and higher ticket prices could be 'new normal' for industry, say analysts 

Mr Goh and the company’s spokespeople were speaking at a virtual results briefing, held a day after SIA reported its first annual net loss.

In the earnings release, the airline said an internal task force had been set up to review all aspects of operations so that it will be ready to ramp up services when air travel recovers.

Laying out more details on Friday, Mr Goh said the task force will have four work groups spearheading efforts in four areas.

Apart from meeting new travel needs, the task force will be looking at health and travel regulations put in place by governments around the world. 

The lifting of these travel restrictions and border controls is key for SIA’s operations, said the chief executive, adding that airline will work with the Singapore Government and actively participate in other industry efforts.

Other areas of focus include ensuring its employees have the necessary licence and certification by the time it restarts operations, as well as working with partners in the supply chain, said Mr Goh.

FIRST ANNUAL NET LOSS IN HISTORY

As COVID-19 crippled travel demand and an unexpected oil price plunge led to fuel-hedging losses, SIA Group on Thursday reported a net loss of S$212 million for the 12 months ending Mar 31, a reversal from the S$683 million profit in the previous year.

The double whammy in the first three months of 2020 eroded improvements made in the first nine months of the financial year, it said in its earnings release, sending operating profit for the year tumbling down 94.5 per cent to S$59 million.

READ: Singapore Airlines posts first annual net loss in 48-year history after COVID-19 cripples demand

Prior to the hit from COVID-19, the company’s transformation programme, which was announced three years ago, had been “immensely successful” and was bearing fruit with SIA achieving record highs in revenue, passenger load factor and other areas in the third quarter.

But amid the severe turbulence brought about by the pandemic, the airline has had to cut 96 per cent of its passenger capacity to the end of June - a move that Mr Goh described as a “very, very drastic” cut.

In April, SIA Group's airlines' passenger load factor, a measure of efficiency, fell to 9.1 per cent. The number of passengers carried plunged 99.6 per cent.

"We are now operating at a very minimal capacity … and therefore virtually, (there is) no revenue,” he said.

“But at the same time, we got to continue to have expenditure to keep our operating capability, which means at this point in time, we are having cash burn.”

The airline has since announced a series of cost-cutting measures, such as wage cuts for its management team and compulsory no-pay leave for employees in March. Non-essential projects have also been deferred, with tighter controls on discretionary spending.

READ: SIA to implement COVID-19 cost-cutting measures, up to 7 days no-pay leave a month for pilots

On the other hand, it has taken steps to shore up its cargo capacity to meet increase in demand for the movement of medical equipment and fresh food.

In a move to build liquidity and shore up its balance sheet, SIA on Mar 26 launched a rights issue to raise gross proceeds of about S$8.8 billion through the sale of rights shares and rights mandatory convertible bonds (MCBs).

It also has the option of issuing up to an additional S$6.2 billion through additional MCBs, if the crisis is prolonged and the group needs additional liquidity. Shareholders had voted in favour of the fundraising on Apr 30. 

This move to tackle liquidity issues early has put SIA in a “strong” balance sheet position and possibly among the “strongest” in the industry, said Mr Goh.

SIA is also concurrently exploring other sources of funding, including secured financing and sale-and-leaseback transactions.

The chief executive noted that the company's strong balance sheet will put it in a "strong position to negotiate and conclude those deals".

Moving forward, COVID-19 will bring about a “new world” with changes not just in consumers’ behaviour, but also business travels as more companies adopt tele-commuting.

The aviation ecosystem could also see disruptions to supply chains, as well as a shift of distribution channels to online alternatives, said Mr Goh.

Given these expectations, SIA has to change how it operates even though there remains “no clear visibility” on the trajectory of a recovery and analyst expectations for “some market contraction” in the near term, he added.

“Beyond that, there is a general believe that there will be growth at some point,” said Mr Goh.

“We think there is opportunity to look at all these different factors and ensure when we emerge, we are in a position of strength and first off the blocks to be able to lead the industry again.”

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Source: CNA/sk(rw)

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