Senior Minister Lee Kuan Yew may no longer be officially in charge, but when the elder statesman speaks, everyone had better listen. In recent months, his name has been closely associated with the union's wage negotiations with Singapore Airlines and the 80-year-old has shown he has not mellowed with age.
After the pilots union, Alpha-S, sacked its leaders primarily for accepting a 16.5 per cent pay cut during last year's Sars crisis, Mr Lee warned of 'cracking heads' if the union moved towards a strike that could harm the country's economic core (not that there were any talks of a strike). A week after he singled out former pilots' union leader Ryan Goh Yew Hock as the instigator of the fall of the previous union executive committee, his permanent resident status was revoked. The explanation: he was deemed an 'undesirable immigrant'. His appeal failed last week, and after more than 20 years in the island state, he now has two weeks to leave - and has also lost his job.
So when Mr Lee said last week that the airline needed to 'transform its business model' within the next six to 18 months to become as cost-efficient as possible, it was clear that major changes are in the offing. Mr Lee mentioned outsourcing some services, selling several businesses - including the baggage-handling unit, Singapore Airport Terminal Services - and warned of possible further job losses.
Indeed, a day later, the airline's chief executive said the company would have to cut costs by as much as 20 per cent a year to remain economically viable.
Paradoxically, while the government seems to be keeping a close eye on Singapore Airlines, it also seems to be distancing itself from it. First, Mr Lee stressed that the government intended to protect Changi Airport ahead of the airline. Then, Temasek Holdings, the government's investment arm, announced its second deal in a planned budget carrier out of the city, this time teaming up with Australian carrier Qantas. Temasek has already invested in Tiger Airways, Singapore Airline's own answer to the budget carrier threat.
This potentially brings to four the number of budget carriers that will start nibbling away at Singapore Airline's business this year, as Singaporean-run ValuAir should take off soon and AirAsia is waiting for a licence.