Singapore Airlines 2016 Annual Report Download - page 18

It is oen said that standing still in our business
means you are actually moving backwards, as it
gives competitors the opportunity to catch up and
overtake you. We have no intention of allowing that
to happen, and we have certainly not been standing
still in recent years.
Structural change has been seen in the airline
business all around the world, but the challenges
have been particularly acute here in Southeast Asia.
Low-cost carriers (LCCs) now have more than 50%
market share in terms of the number of seats flying
within Southeast Asia, for example. This makes it by
far the most competitive LCC market in the world.
At the same time, Middle Eastern airlines with deep
pockets have aggressively expanded into Southeast
Asia and now have multiple daily frequencies to all
the key capital cities within the region.
These and other structural changes have required us
to look beyond our core areas of expertise, and I am
pleased to say that the aggressive moves we have
made in recent years have kept the SIA Group in the
position of strength that we have been accustomed
to. While many other airlines within our region have
been posting losses, we remain an industry leader
and continue to report positive earnings.
As I have written in past Letters to Shareholders,
we are clear about the challenges that we face.
Our primary strategies to address them are
sound. These include: having a portfolio of
airlines operating in both full-service and low-cost
segments of the market; adding new hubs through
joint venture airlines in other parts of the world;
developing adjacent businesses to introduce new
streams of revenue; and strengthening our premium
positioning through continued investment in our
products, services and network. Development was
seen in all these areas during the financial year.
In November, we launched a voluntary general oer
for Tigerair and now have full ownership, which will
allow for enhanced synergies with Scoot and the
rest of the SIA Group. Scoot also continued on its
strong growth path as it transitioned to a more
fuel-eicient Boeing 787 fleet and added new
routes, closing the financial year with its first profits.
Outside of Singapore, Vistara continued growing
in India and celebrated its first year of operations
in January, while NokScoot launched operations
during the financial year from its Bangkok base.
Stephen Lee
Chairman
Chairman’s Letter
to Shareholders
Singapore Airlines16
STRATEGY