Singapore Airlines plans US$850 million fleet upgrade, despite drop in profits
Airline posted a 9 per cent drop in profits in its last financial year, but is looking to upgrade its current fleet of aircraft
After posting a significant drop in profit last year, Singapore Airlines says it plans to invest US$850 million (HK$6.6 billion) in its aeroplanes and services, contrary to the across-the-board cost-cutting strategy of its arch-rival Cathay Pacific Airways.
In its last financial year, Singapore Airlines posted a 9 per cent drop in profits, due to weakening demand for full-service long-haul travel amid competition from low-cost and Middle Eastern carriers.
But rather than cut services and costs to improve profits, which was the route employed by Hong Kong’s flagship carrier, it planned to invest US$850 million in upgrading its 18-strong A380 fleet.
“From our perspective, there is still demand for full-service and premium service, and we want to be able to demonstrate that we can offer a premium product,” Singapore Airlines chief executive officer Goh Choon Phong said. “Hence, all these investments are to make sure that we continue to have product and service leadership.”
As Singapore’s Changi airport soars, is HK$141 billion upgrade a case of too little too late for Hong Kong?
While Singapore Airlines’ strategy could create the perception among customers that it was remaining fresh and investing in service and quality, cost cutting could give the opposite impression.