Channel NewsAsia
Updated: 05/09/2014 12:19 | By Channel NewsAsia

SIA to launch premium economy class in 2015

SIA to launch premium economy class in 2015

SIA to launch premium economy class in 2015

SINGAPORE: Singapore Airlines will launch a premium economy class in the second half of next year.

SIA’s CEO Goh Choon Phong made the announcement at the carrier's fourth quarter and full year earnings briefing on Friday.

The move comes as SIA responds to intense competition in the full service airline space.

SIA is aiming to sell more tickets to a wider group of customers.

The new premium economy class is targeted at business and leisure travellers wanting more legroom than is available in traditional economy class.

SIA had previously said that there were no plans to introduce that category of seats.

Mr Goh said: “A decision was taken last year, having gotten the latest review and also feedback from customers, etcetera -- that we think it's time for us to introduce the premium economy.

“So a lot of work has since been done between then and now, and we're now able to say that we are looking at introducing it in the second half of next year.

“You can rest assured that when we set our mind to do something, it will be done well. And we will, of course, announce the product as it becomes more available, because we're still in the process of finalising some of the details."

No details were given, but analysts said rival carrier Cathay Pacific could serve as inspiration.

The premium economy class accounts for up to 15 per cent of seats on Cathay, and each seat costs double of that in economy.

Paul Yong, vice president of Equity Research at DBS Vickers, said: "We think that they should have done it earlier, but better late than never.

“And the rationale behind it really is that this segment has seen significant acceptance from consumers. We've seen that Cathay Pacific actually introduced this product in the middle of 2012, and seems to have been quite successful."

At its full year results briefing, SIA also spoke on how it plans to meet rising challenges in the airline industry.

It is sticking to its multi-brand strategy, and intends to step out of its home base to set up hubs with joint venture partners Tata Sons and Nok Air in New Delhi and Bangkok, respectively.

Greg Waldron, Asia Managing Editor of Flightglobal, said: "With its use of budget carriers, the SIA group has been able to maintain 50 per cent capacity share out of Changi Airport since the last 10 years. So they've been very successful in defending their capacity at their key hub airport.

“The problem is, I think there have been some issues retaining profitability from this move to Tigerair, from moving people to Scoot. I think that's been an issue for them."

At the same time, SIA will invest US$325 million to upgrade 19 planes -- roughly a fifth of its fleet size.

Those new cabin products, such as new seats, are already available on flights to London and Tokyo.

But once the upgrade is completed, one could soon be flying to places like Hong Kong, Sydney, and San Franscisco on them.

The same 19 planes will also be fitted with the premium economy class seats.

The new cabin class will be first rolled out on SIA's Boeing 777-300ERs, followed by its Airbus A380s, and A350s.

The carrier reported its fourth quarter and full year earnings on Thursday.

For its fiscal fourth quarter ended in March, SIA posted a net profit of S$27 million, down 60 per cent from the same period a year ago.

For the full year ended on March 31, it booked a net profit of S$359.5 million -- a drop of 5.4 per cent from a year ago.

In trade on Friday, SIA's shares closed 0.4 per cent lower at S$10.21.  - CNA/fa/ac/nd

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