Singapore Airlines 2006 Annual Report Download - page 9

The capacity increases provide us an
opportunity to seek out new markets,
and tap currently growing ones, such
as China and India. We intend to
make the most of the opportunities
that are important to the growth of
the Group in coming years. Our eyes
must be fi rmly on the future. We must
avoid complacency.
IN CLOSING
In addition to recognising the
commitment of our staff to deliver
what, in the circumstances, is a very
good result, I would like to thank
our many loyal customers for their
continued support and business over
the years. We appreciate they have
a choice, and we will never end our
quest to not just meet – but exceed
– their expectations. We will continue
to deliver the highest levels of service
and product innovation to ensure their
loyalty is never taken for granted.
You – our shareholders – may also
be assured of our commitment to
continue hard work to deliver a return
on your investment. I speak for my
colleagues on the Board, as well as
management and every staff member
in our Group – in committing our
effort to ensuring Singapore Airlines
remains an attractive investment, as
well as the world’s premium airline.
STEPHEN LEE CHING YEN
Chairman
07
Singapore Airlines Annual Report 05/06
THE BOARD
I wish to thank my predecessor, Koh
Boon Hwee, who was Chairman for
much of the year in review, for his
commitment to Singapore Airlines
and his stewardship over the past four
years as Chairman.
I would also like to recognise the
services of two of our longest-serving
Directors, Mr Fock Siew Wah, and
Mr Charles Goode AC, as they will
step down at the forthcoming Annual
General Meeting. Shareholders can be
well-pleased with the contributions
each has made to the Group.
The process of renewal, however, is
an ever-ongoing one. I welcome two
new colleagues who joined the Board
during the year: Mr James Koh Cher
Siang, and Mr David Gonski AO.
Positioning the organisation for its
future challenges requires us to source
and embrace talent and leadership.
We shall continue to do.
FUTURE CHALLENGES
The Group’s expenditure on fuel
was over $4.2 billion in 2005-06:
35% of total expenditure. To put
that in some perspective, it was an
increase of about $1.5 billion over the
previous year. Before that, the average
expenditure on fuel was about
$1.8 billion a year for three years.
There is little the Group – indeed,
even the industry – can do about the
runaway price of fuel. We can strive
for savings at the margin, through
improvements in fl ying practices,
pursuit of new and more direct fl ying
routes, extension of weight reduction
programmes to keep aircraft light,
devising more cost-effective hedging
programmes, and the like. We
will also continue the policy of
maintaining a young fl eet of aircraft,
to benefi t from the latest technology
in the area of fuel consumption.
But even together, these initiatives
cannot protect us totally from higher
expenditure on fuel.
As a Group, we are conscious that
other measures to deal with high
fuel prices – such as the imposition
of surcharges – are fi nite before they
begin to impact on demand.
As you will see from the year’s results,
demand was robust throughout
the network. More people fl ew on
Singapore Airlines services last year
than at any time in our past history.
However, at some point, the high cost
of fuel will have a knock-on effect
on the wider economy, so we are
cautious about how far we can push
the revenue side before surcharges
impact negatively on demand.
Singapore Airlines will not stand
still, waiting for our competitors
to catch up. Facing the challenges
of competition will mean we have
to change. In such a competitive
business, change is a constant.
We will have to continue to
restructure our cost base. Productivity
improvements will also be required as
we bring capacity increases on stream
in the next few years. We need to
manage these changes with our
people. We must involve them in the
change process, and communicate
the need for change very well. We will
use open communication channels
to breed a sense of confi dence,
and improved trust, between
management, our people and unions.
We operate on a commercial basis and our people know that our
customers have a choice of airlines... Recognising this principle means a
constant focus to ensure our people are equipped with what they need
to serve our customers – in training and in physical resources. It means
regular engagement with staff and unions to ensure they’re as much part
of the future direction of the organisation as management.