SIA to launch new low-cost carrier

Singapore Airlines said Wednesday it would launch within one year a
new budget airline using wide-body aircraft to tap into growing
consumer demand for low-cost travel over longer distances. SIA already
runs a short-haul mid-price airline called SilkAir and owns 32.9 per
cent of budget carrier Tiger Airways but said it decided to establish
the new subsidiary after 'an extensive review and analysis' of the
market. It did not give a name for the future airline, saying more
details will be announced 'in due course' including its branding,
services and routes. 'Operations are expected to begin within one
year. The airline will be wholly owned by Singapore Airlines, but will
be operated independently and managed separately from SIA,' the
company said in a press statement. SIA said the new carrier will
'enable the airline to serve a largely untapped new market and cater
to the growing demand among consumers for low-fare travel.' The move
will put the new carrier in competition with AirAsia X, the long-haul
affiliate of Malaysian budget carrier AirAsia and British tycoon
Richard Branson's Virgin Group. Unlike most other budget airlines
using single-aisle planes for short hops, the new carrier will operate
widebody, double-aisle aircraft to ply medium- and long-haul routes.
'We are seeing a new market segment being created and this will
provide another growth opportunity for the SIA Group,' SIA chief
executive Goh Choon Phong said. 'As we have observed on short-haul
routes within Asia, low-fare airlines help stimulate demand for
travel, and we expect this will also prove true for longer flights.'
Shukor Yusof, an aviation analyst with Standard and Poor's Equities
Research, said SIA was making a foray into a largely untapped market,
which is dominated in the region by AirAsia X.
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