Singapore Airlines 2005 Annual Report Download - page 9

SIA Annual Report 04/05 07
competitive landscape changes. We
have to continue to drive our cost
base down – especially against the
backdrop of a high fuel-cost
environment. Good profits, year after
year, count for little if we are not at
least earning our cost of capital.
Earning our cost of capital is not
only expected by shareholders; it is
also the best long-term basis for job
security for our employees. The proof
of this is evident in watching any
number of once-prized US airlines that
are now in trouble because they never
achieved sustainable business models.
Our growth is dependent on
several factors. First and foremost,
underpinning it with a solid financial
position. Second, continuing to deliver
services our customers demand. And
third, the ability and freedom to
compete.
One area, however, where the pace
of change in our industry is not keeping
up with the demands of our customers
is the archaic system of regulations
that restrict airlines' ability to compete
on certain routes.
Singapore Airlines stands for free,
fair and open competition. We do so,
in part, because we know no
alternative. We do not seek protection
from competition; Singapore openly
welcomes airlines from all corners of
the globe. This drives us to compete
on the world stage, and to deliver
world class service.
Singapore Airlines, has for some
time, been working hard to access the
Trans-Pacific route between Australia
and the USA, which remains one of
the most protected air routes in the
world. Our Australian competitor can
currently access markets beyond
Singapore. Yet, it ferociously opposes
giving SIA the reciprocal right to access
the USA market from Australia.
The Australian Government's
caution is surprising. There is a free
trade environment between Australia
and Singapore. Studies conclusively
show the benefits of opening market
access. Competition will benefit the
tourism industry and those benefits
will flow to Australian consumers in
general and all the players in the
tourism business, not just a new
airline on the route.
Singapore Airlines will continue to
be a leading advocate of liberalisation
and the benefits it brings.
This year, our people are readying
themselves for major events, with two
new aircraft types joining the fleet in
calendar year 2006. Singapore Airlines
will be the launch customer for the
Airbus A380: a very exciting event for
everyone in the Group. And at about
the same time, we will receive the first
of 19 new Boeing 777-300ER aircraft.
While these additions are still a year
or more away, preparatory work is on
in earnest. With them will come a suite
of new products and innovations to
keep Singapore Airlines ahead of our
competitors. Stay tuned!
Your Board and its management
team will continue to lead the
organisation through the challenges
posed by a competitive market. We
will meet those challenges head-on,
and remain resolutely focused on
delivering the best outcomes possible
to our shareholders, our customers
and our employees.
I would like to thank my fellow
Board members for sharing their
commitment and their passion over
the last year, and commend our
management team and staff for their
continuing dedication and support,
and the unions for their understanding
as we move forward.
Most of all, I want to thank our
customers for their loyal support and
for caring about Singapore Airlines.
We received 50,000 letters from our
customers last year; two-thirds of them
complimentary. Every letter is read,
and feedback is acted upon. Innovative
suggestions are welcomed and, where
possible, implemented. Constructive
criticism leads to corrective action.
Most importantly, every one of those
letters helps us to understand and
anticipate the needs of our customers.
KOH BOON HWEE
Chairman