SilkAir eyes North, West markets

SilkAir, the 100 per cent Singapore Airlines subsidiary regional short-to-medium-haul carrier, has announced plans to expand its range in India, by exploring destinations in the North and West.

The airline, which is already active in eight cities in India — Kolkata, Bengaluru and Chennai (joint operations with Singapore Airlines), and Visakhapatnam, Hyderabad, Kochi, Thiruvananthapuram and Coimbatore (standalone) — will now be focusing more on Tier-II and Tier-II cities to provide greater connectivity.

“We connect 48 destinations in Asia with Singapore. In India, we are looking at Pune, Jaipur, Lucknow, Chandigarh and Amritsar as potential destinations,” SilkAir General Manager India Jagdish Ram Bhojwani told Deccan Herald, without revealing further details.

Currently, SilkAir has a fleet of 28 aircraft comprising Airbus A319s, A320s and Boeing 737-800s. It is planning to replace its entire Airbus fleet with new Boeing 737s in the near future. 

In 2012, SilkAir finalised an order for 54 Next-Generation 737s (23 737-800s and 31 737 MAX 8s) worth $4.9 billion at list prices, which will be deployed from late-2016.

“Our network involves flying to destinations which are situated five hours away from Singapore. The B737-800 MAX will enable us to extend our flight range to over six hours of fly time. Hence, we foresee expansion into the northern and western markets of India by late 2016,” Bhojwani said.

The foray into smaller markets would also mean that the airline is able to provide connectivity to the Singapore Airlines network in India, by serving more regions collectively. 

ATF price cut helps

The reduction in ATF prices by the government has encouraged Singapore Airlines to reduce its fuel surcharges for tickets issued on or after February 26, 2015. The new fuel surcharge levels will apply to Singapore Airlines and SilkAir flights, representing a decrease of between $5 and $83 per sector, depending on distance and class of travel.

“Fuel prices have declined in recent months, although jet fuel continues to account for a significant percentage of our group expenditure. Meanwhile, the government has been supportive, and with greater emphasis on developing suitable infrastructure to make our planned destinations airport-ready, we may realise our plans effectively,” he said.

SilkAir, which is bullish on India, has increased seasonal flight frequencies from most of its destinations. 

“Our annual load factor for FY 2014 is at 65-70 per cent, which is expected to touch 74 per cent this fiscal,” he said. “With greater range will come more inbound tourism, education, and job creation. The employment generated at each new destination would be to the tune of 100-200 jobs.” 

SilkAir clocked an operating profit of $18 million in the third quarter FY 2014-15, compared with $6 million during the same quarter of FY 2013-14. The company is growing at 2-4 per cent year-on-year. On average, it is adding four destinations in Asia to its network each year, Bhojwani said.