SIA earnings likely to stay &lsquo pressured&rsquo despite over 380,000 discounted tickets: analysts

 

The airline released more than 380,000 discounted tickets on Oct 24, with the sale set to end on Nov 6. Over 200,000 tickets were for SIA and the remainder for its low-cost subsidiary Scoot.

 

However, the group&rsquo s earnings will likely remain under pressure in the near term due to concerns around passenger yield, drag from the crash of Air India flight 171 and rising non-fuel costs, said analysts.

 

&ldquo This is a regular seasonal marketing exercise where   SIA   : C6L -0.75% and Scoot routinely run large-scale fare promotions to secure a base load of bookings well in advance,&rdquo said DBS analyst Tabitha Foo.

 

She added that load factors have improved year on year in 2025, but yields have remained under pressure. This indicates SIA Group has been &ldquo effective in stimulating traffic through pricing&rdquo .

 

Yield refers to the average revenue an airline earns per passenger for each kilometre flown.

 

Maybank analyst Eric Ong echoed the sentiment, stating that the sale will help boost the group&rsquo s passenger load factor amid heightened competition, especially from regional carriers.

 

&ldquo However, this suggests that passenger yield may continue to moderate, coupled with industry-wide capacity growth,&rdquo he added.

 

Foo added that she expects SIA&rsquo s earnings to &ldquo remain pressured in the near term&rdquo on yield concerns and drag from the Air India crash.

 

Ong also said that Maybank will continue to monitor the group&rsquo s share of results of associated companies, notably from Air India, to &ldquo see if the losses continue to widen&rdquo and if there is any provision from the crash.

 

For the first quarter ended Jun 30, the net profit for SIA Group declined 58.8 per cent year on year to S$186 million from S$452 million. This was due to lower interest income and share of losses of associates. Analysts had downgraded its shares in response.

 

Rising non-fuel costs on the back of inflationary pressures could also partly offset the weaker US dollar and jet fuel prices, added Ong.

 

Still, not all is negative.

 

Foo said: &ldquo Forward bookings are still robust, and air travel demand continues to show resilience, barring a recessionary scenario, alongside lower jet fuel prices lending additional support to SIA&rsquo s margins.&rdquo

However, the group&rsquo s cargo business was affected by Typhoon Ragasa in East Asia

 

[SINGAPORE] Passenger traffic for the two carriers under the Singapore Airlines (SIA) Group was 3.7 per cent higher year on year in September.

 

The increase in traffic for SIA and Scoot outpaced the 2.5 per cent rise in passenger capacity, said SIA Group in its latest operating update released on Wednesday (Oct 15).

 

But the group&rsquo s cargo business was hit by Typhoon Ragasa in the month, particularly on routes to and from East Asia, it noted.

 

Passenger traffic &ndash which measures the demand for an airline&rsquo s service and is derived by multiplying the number of paying passengers by the distance they have travelled &ndash came in at 12.9 billion for the month, compared with 12.5 billion in the corresponding period last year.

 

As a result, the group&rsquo s passenger load factor (PLF) increased by 1 percentage point on year to 87.1 per cent, with SIA and Scoot posting monthly PLFs of 86.2 per cent and 90.1 per cent, respectively.

 

The two airlines carried a combined total of 3.4 million passengers, 8 per cent higher than in the same period last year.

 

SIA&rsquo s total passengers rose 4.4 per cent to 2.2 million passengers, while Scoot saw a 15.5 per cent increase to 1.2 million passengers.

 

Meanwhile, cargo capacity contracted by 0.8 per cent on year, driven in part by lower freighter aircraft activity due to the typhoon, while overall cargo loads decreased by 3.8 per cent.

 

Consequently, the cargo load factor was 56.2 per cent, 1.8 percentage points lower than the same period last year.

 

At the end of September 2025, the group&rsquo s passenger network covered 129 destinations in 37 countries and territories, with SIA serving 78 destinations and Scoot serving 73 destinations. 

 

The cargo network comprised 133 destinations in 38 countries and territories.

When sustainability ambitions collide with outdated workflows, SIA&rsquo s shift from paper to pixels would be a clear leadership signal

 

LEGACY airlines across the world are under growing pressure to prove that their sustainability ambitions are more than skin-deep. Fleet renewal, sustainable aviation fuel (SAF) investments and carbon offset schemes dominate corporate sustainability reports. Yet behind the scenes, many full-service carriers continue to operate with deeply manual workflows &ndash a quiet contradiction that undermines their green credentials.

 

Singapore Airlines (SIA) illustrates this paradox particularly well. Long celebrated as a benchmark for premium service and operational excellence, the carrier has built its brand on innovation &ndash from fuel-efficient aircraft and inflight recycling to its expanding SAF initiatives. But like many legacy airlines, SIA still relies heavily on paper-based systems for day-to-day cabin operations.

 

Passenger manifests, meal orders and inflight reports are often printed, prepared and filed manually. Even in premium cabins, orders are still taken by hand on paper slips. In an era when competitors are deploying integrated digital crew apps and real-time service dashboards, such processes feel increasingly out of sync with the sustainability narrative airlines wish to project.

 

A hidden source of inefficiency

The environmental cost of paper documentation may seem minor compared to jet fuel emissions, but its symbolism matters. It highlights a gap between public commitments and internal execution &ndash and reveals a broader cultural inertia that has slowed digital transformation in legacy carriers.

 

Each SIA flight involves dozens of cabin crew printing and preparing operational paperwork, multiplied across thousands of flights a year. Emirates, Qatar Airways and British Airways, by contrast, now equip crew with tablets that consolidate flight information, passenger preferences and catering data into a single system. This shift doesn&rsquo t just save paper it enables smarter, more sustainable decisions &ndash reducing food waste, improving inventory management and capturing real-time insights that can inform future efficiency gains.

 

For airlines striving to cut emissions and resource use, digitalisation represents one of the most underappreciated sustainability levers. Yet for many, it remains a slow-moving ambition rather than a fully realised transformation.

 

The credibility gap in airline sustainability

Legacy carriers often approach sustainability through visible or high-profile initiatives: new-generation aircraft, SAF blending or plastic reduction campaigns. These are essential, but environmental leadership today is increasingly holistic. It extends to the digital infrastructure that underpins daily operations &ndash where incremental inefficiencies can add up to significant environmental and reputational costs.

 

This disconnect, what sustainability experts call a &ldquo credibility gap&rdquo , emerges when corporate pledges outpace internal change. For passengers, it&rsquo s not only about what fuels the aircraft &ndash but how the airline operates, manages waste and empowers its staff to act sustainably. A digitally enabled crew isn&rsquo t just more efficient it signals a company&rsquo s seriousness about modernisation and environmental alignment.

 

Why progress is slow

The slow pace of digital transformation among legacy carriers reflects both structural and cultural challenges. Integrating new technology into decades-old IT systems &ndash spanning rostering, catering and inflight reporting &ndash is complex and expensive. It requires retraining thousands of staff, updating cybersecurity protocols and managing operational risk.

 

There&rsquo s also a mindset dimension. Airlines with strong service cultures, such as SIA, have long prized human interaction as a differentiator. Some within the industry fear that digital interfaces might erode the warmth and personal touch that premium brands are built upon.

 

Yet leading examples suggest the opposite: Emirates&rsquo and British Airways&rsquo digital crew apps, for instance, allow staff to anticipate passenger needs with personalised insights &ndash enhancing, not replacing, the human connection.

 

Post-pandemic financial constraints have further delayed such initiatives. With capital often prioritised for fleet renewal or SAF procurement, crew digitalisation tends to fall down the investment list, despite its potential for both cost and carbon savings.

 

Digital sustainability is still sustainability

If the aviation sector is to achieve meaningful decarbonisation, sustainability cannot stop at the aircraft&rsquo s engine. Digital transformation should be seen as an environmental imperative &ndash a foundation for reducing waste, improving operational efficiency and empowering staff.

 

A fully digital cabin ecosystem could link pre-flight briefing, inflight service and post-flight reporting into a seamless data flow. That integration enables smarter catering and inventory planning, reducing excess weight and food waste. It can also streamline crew workflows, cutting hours of manual preparation and freeing time for service delivery. The environmental benefits would therefore be matched by human ones: less stress, better focus and greater job satisfaction.

 

A chance for leadership

For SIA &ndash and legacy carriers worldwide &ndash the shift from paper to pixels represents more than a technical upgrade. It is a strategic opportunity to close the gap between sustainability rhetoric and operational reality. By embedding digitalisation into its sustainability agenda, the airline could once again set the regional benchmark, this time for holistic environmental leadership.

 

After all, sustainability in aviation goes beyond how efficiently an airline flies, to also how intelligently it operates. In that respect, the next great leap forward for legacy carriers may come not from the engines beneath their wings, but from the tablets in their crew&rsquo s hands.

Changing labour market and new workforce expectations are a stress test for the airline&rsquo s model of service excellence

 

FOR decades, Singapore Airlines (SIA) has been held up as the gold standard in global aviation. Its iconic cabin crew, impeccable service, and attention to detail have become synonymous with Asian hospitality in the skies. The airline&rsquo s consistent ranking among the world&rsquo s best is a testament to its unwavering commitment to service excellence. 

 

But beneath the polished surface lies a question the aviation industry, and SIA itself, must confront: Is this model of perfection sustainable in today&rsquo s evolving labour market realities?

 

The foundation of SIA&rsquo s brand is the &ldquo Singapore Girl&rdquo &ndash a symbol of grace, hospitality, and a refined service ethos. While the branding has been updated, the core expectation remains: near-flawless service delivered by a highly professional, meticulously trained cabin crew. 

 

This level of service is a key differentiator in a fiercely competitive industry where price and schedule often dictate passenger choices. For a premium airline, the human touch is not just a value-add it is the product itself.

 

The human cost of perfection

The process of forging this human excellence is rigorous. Cabin crew are trained extensively, not just in safety protocols but also in grooming, deportment, and a brand of customer interaction that feels both intuitive and carefully curated. The result is an in-flight experience that is consistently refined, anticipating passenger needs with a subtle yet impactful elegance.

 

Yet, this perfection carries a human cost. Media reports and anecdotal accounts from current and former crew point to the demanding nature of the role: long duty hours, rigid service protocols, and the emotional labour required to maintain a consistently cheerful and helpful demeanour even in challenging circumstances. The psychological pressure of upholding such an exacting image can be immense.

 

While SIA does not publish a breakdown of cabin crew attrition, its Sustainability Report FY2024/25 states that the combined turnover rate for SIA and Scoot was 8.2 per cent in the financial year 2024 to 2025 &ndash not excessively high by industry standards, though the figure excludes involuntary departures. Still, the anecdotal evidence suggests that for some, sustaining this pace over the long term is difficult, raising questions about whether the airline can rely on the same steady pipeline of talent in the future.

 

Younger generations entering the workforce add another layer of challenge. Millennials and Gen Z place a higher premium on work-life balance, mental well-being, and personal fulfilment over brand prestige. They are less willing to accept rigid, top-down corporate cultures in exchange for a prestigious employer on their resume. The very attributes that have made SIA stand out may risk alienating a new generation of workers.

 

The squeeze of rising costs

Compounding this is the economic reality of Singapore. The city-state is consistently ranked among the world&rsquo s most expensive places to live. Rising housing and living costs mean that even with competitive pay, financial pressure is mounting for Singapore-based crew.

 

This dynamic risks accelerating what might be termed an &ldquo experience drain&rdquo . Seasoned crew, who have mastered the intricacies of five-star service and act as mentors to new recruits, are the hardest to retain. Their departure is not just a loss of a single employee but of institutional knowledge, consistency, and leadership. When attrition bites, service quality can erode &ndash not overnight, but in subtle ways that premium passengers may eventually notice.

 

Unlike SIA, competitor airlines such as the Gulf carriers have a structural advantage. With globally diversified recruitment pools, they spread risk and tap into talent from dozens of nationalities, often offering expatriate packages that are attractive to young workers from developing economies. 

 

SIA&rsquo s reliance on a largely Singapore-based workforce, while central to its identity, magnifies its exposure to domestic cost pressures and makes its labour model less flexible in responding to global trends.

 

A model under strain

The central question remains: Is SIA&rsquo s celebrated labour model fit for the future? The airline&rsquo s premium positioning depends entirely on delivering a service experience few can replicate. 

 

But that model assumes a steady pipeline of motivated, well-trained, and loyal crew. If talent becomes harder to retain and replacements less seasoned, the core of the brand comes under immense pressure.

 

There are already signs the model is under strain. The global shortage of pilots and cabin crew has forced carriers to compete more aggressively for talent, driving up salaries and benefits. 

 

Training costs are rising, and the investment in each new hire is becoming more significant. The labour market of the late 20th century, where prestige and loyalty could be relied upon to fill the ranks, is no longer the same.

 

To remain competitive, SIA must rethink its labour equation. This does not mean abandoning the premium ethos that defines its brand, but finding new, innovative ways to sustain it. 

 

Technology could play a role: AI-driven personalisation may allow crew to anticipate passenger needs more easily, while automation of routine tasks could free up time for more meaningful interactions.

 

But technology alone is not enough. SIA&rsquo s employee value proposition must evolve. Beyond competitive salaries, crew need to feel supported, respected, and able to thrive. This means greater attention to mental health, more flexible rostering, and a culture that recognises contributions beyond adherence to protocol. 

 

For a service-led airline, human capital is as critical as fleet or fuel. Neglecting it risks undermining the very foundation of the brand.

 

The real test of excellence

Ultimately, the true test of service excellence is not whether an airline can deliver five-star hospitality in the short term, but whether it can sustain that delivery over decades. Singapore Airlines has proven it can define the gold standard. 

 

The open question now is whether it can reinvent its labour model to preserve that standard in a new era of workforce expectations &ndash challenges that will test not just SIA, but its Gulf rivals as well.

Passenger traffic is at 13.6 billion for the month, compared with 12.9 billion in the corresponding period last year

 

[SINGAPORE] Passenger traffic for the two carriers under the Singapore Airlines Group was 5.4 per cent higher in August 2025, compared with the previous year, indicated its latest operating update released on Monday (Sep 15).

 

The increase in passenger traffic for SIA and Scoot outpaced the 2.7 per cent expansion in passenger capacity.

 

Passenger traffic &ndash which measures the demand for an airline&rsquo s service and is derived by multiplying the number of paying passengers by the distance they have travelled &ndash came in at 13.6 billion for the month, compared with 12.9 billion in the corresponding period last year. 

 

As a result, the group&rsquo s passenger load factor rose to 88 per cent, up 2.3 percentage points from the prior year. SIA posted a monthly passenger load factor of 86.9 per cent, and Scoot recorded 91.9 per cent for the same period. 

 

The two airlines carried a combined total of 3.6 million passengers, 9.4 per cent higher than last year. 

 

Scoot carried a total of 1.3 million passengers, up 14.2 per cent from the year before, and SIA carried 2.3 million passengers, an increase of 6.9 per cent over the same period. 

 

As for its cargo business, loads rose by 0.5 per cent, below the 2.3 per cent expansion in cargo capacity. 

 

As a result, the cargo load factor declined by 0.9 percentage point to 55.2 per cent. This comes as front-loading demand eased in August. 

 

Shares of SIA slid 0.5 per cent or S$0.03 to close at S$6.51 on Monday.  

 

[SINGAPORE] Scoot, the budget offshoot of Singapore Airlines : C6L 0% (SIA), has been adding routes to its network, including some that were previously served exclusively by Jetstar Asia.

 

These are Okinawa in Japan and Labuan Bajo in Indonesia &ndash formerly Jetstar Asia&rsquo s &ldquo monopoly&rdquo &ndash as well as Chiang Rai in Thailand, and Da Nang and Nha Trang in Vietnam. 

 

But would the former routes of its now defunct peer be a boon or bane to Scoot? After all, Jetstar Asia had failed to be profitable for years before it exited Changi Airport for good. Would Scoot be able to reap economies of scale from other routes as well?

 

The viability of budget carriers has been in the spotlight since the announcement of Jetstar Asia&rsquo s closure.

 

To be fair, Scoot is quite different from Jetstar Asia.

 

First, It has a far larger fleet of 53 planes, as at end-June. By contrast, Jetstar Asia had only a modest fleet of 13 planes when it announced its exit from Singapore in June. As at the end of July, Scoot was serving 73 destinations, while Jetstar Asia had 16 routes.

 

Theoretically, Scoot has a home-ground advantage. Though Jetstar Asia was also anchored here, the traffic it was able to tap from its parent Qantas Airways arguably was less than what Scoot enjoys from SIA.

 

There are also economies of scale for Scoot, by sharing the same base with SIA.

 

But the airline industry, particularly the budget segment, is infamously competitive. The inflationary environment is also not helping airlines, especially if they operate in a premium airport.

 

Already, declining airfares &ndash or yields &ndash amid rising supply have taken a toll on Scoot&rsquo s operating financials, as shown in SIA&rsquo s first-quarter update published on Jul 28. For the quarter ended Jun 30, 2025, Scoot dipped to an operating loss of S$16.5 million from an operating profit of S$2.6 million for the same period a year earlier. This marked the budget carrier&rsquo s first quarterly operating loss in 12 quarters. 

 

The last time Scoot reported a quarterly operating loss was in Q1 FY2023, when borders in Asia had not fully reopened. The airline was quick to reverse its operating loss of S$51.9 million for the quarter just two quarters later, it posted a record-high operating profit of S$134.9 million for Q3 FY2023.

 

The recent quarter&rsquo s performance came on the back of a high passenger load factor &ndash the percentage of available seating capacity filled with paying passengers &ndash which stood at 91.5 per cent. 

 

But a high load factor may not translate into profitability. Scoot had an even higher breakeven load factor &ndash 98.4 per cent. 

 

Yield, which measures the revenue an airline earns per seat taken by a paying passenger, slid 1.8 per cent year on year to S$0.061 per kilometre this was also the lowest in 12 quarters.

 

Revenue per available seat-kilometre &ndash the revenue an airline earns for each seat it offers, per kilometre flown   &ndash was S$0.056. It was 4.7 per cent lower year on year, and the lowest in 12 quarters since Q2 FY2023. 

 

Scoot had at times incurred losses before the pandemic hit. And it was not alone.

 

Cathay Pacific&rsquo s low-cost carrier HK Express earlier this month posted a loss of HK$524 million (S$86.4 million) before net finance charges and tax for the half-year ended Jun 30, 2025, with the Hong Kong group flagging lower airfares as the industry raises capacity.

 

Scoot&rsquo s chief executive Leslie Thng had told the media shortly after the airline achieved its record-high operating profit in Q3 FY2023 that demand-and-supply dynamics were in its favour.  

 

At the time, Scoot and SIA were able to capture pent-up demand as the group&rsquo s flight crew was largely intact, whereas other airlines were not able to restore supply as quickly due to retrenchments during the pandemic.

 

That advantage has diminished with other airlines adding supply.

 

There is also a limit to what airlines can cut in terms of cost, and they are constrained in pricing due to competition. 

 

While Jetstar Asia&rsquo s departure could be a boon to the budget carriers operating in Changi Airport, the carrier had only about 4 per cent of the traffic at the airport. 

 

Also, Jetstar Asia had one of the most competitively priced fares, and Scoot may not be able to price at such levels. Other carriers might stand to benefit instead from the non-exclusive routes, given their lower fares.

 

Air India&rsquo s losses were a drag on SIA&rsquo s recent reported financials, and its Indian associated company&rsquo s profitability appears unable to improve soon. 

 

Thus, SIA shareholders might want to watch Scoot&rsquo s profitability as they assess the group&rsquo s financial prospects &ndash but also take into account the strategic role the budget arm plays.

From Nov 1, certain economy class routes will enjoy lower rates, most cabin classes and routes will have hikes of 5% to 20%

 

[SINGAPORE] Singapore Airlines (SIA) on Monday (Aug 25) announced a hike in its KrisFlyer redemption and upgrade rates across most route and cabin classes &ndash the first adjustment since 2022.

 

This follows an improved KrisFlyer redemption scheme for Scoot that was dubbed a &ldquo win-win&rdquo for SIA Group by analysts.

 

KrisFlyer members currently redeem or upgrade flights using a fixed number of miles according to cabin class &ndash Economy, Premium Economy, Business, First/Suites &ndash and redemption categories &ndash Saver and Advantage. Redemptions under the Advantage category require more miles.

 

From Nov 1, Saver award rates will increase by 5 per cent across all cabin classes for flights to and from Europe and the US. Business, First and Suites class redemption rates for flights within Asia and South-west Pacific will also rise by 5 per cent, though Economy Saver rates will drop 5 per cent for these routes.

 

For flights to and from Zone 10 (Africa, the Middle East, and Turkey), Saver rates will rise by 10 to 20 per cent for all cabin classes.

 

Advantage award rates will also increase. Redemption across all travel zones and cabin classes, except for Zone 10, will be 10 to 15 per cent higher. For Zone 10, rates will rise by 5, 18 and 15 per cent for economy, business and first class, respectively. 

 

Redemption bookings confirmed and ticketed on or before Oct 31 are not affected.  

 

The carrier also announced the introduction of &ldquo Access&rdquo from Nov 1. This is a new redemption type that allows members to secure seats even if all KrisFlyer-allocated redemption seats have been taken up, so long as there are still available seats on the flight.

 

An airline spokesperson said that Access will require more miles than Saver and Advantage redemptions, and the number of miles required will change based on availability and demand for that specific flight. 

 

SIA also said KrisFlyer members can earn status credits through non-flight spending with Kris+, KrisShop and Pelago from Sep 1. These credits will count towards Priority Passenger Service (PPS) Club or KrisFlyer Elite status qualification or renewal.

 

PPS Club members will earn one PPS Value for every S$3 spent, while KrisFlyer members will earn one Elite mile for every S$1 spent. 

 

These earnings are capped depending on status for example, a maximum of 2,500 PPS Value can be counted towards renewal of PPS status. 

The increase outpaces the 2.8% expansion in group passenger capacity

 

[SINGAPORE] Passenger traffic for the two carriers under Singapore Airlines (SIA) : C6L -0.15% Group was 6.2 per cent higher in July 2025, compared with the previous year, according to the company&rsquo s latest operating update released on Friday (Aug 15). 

 

The increase in passenger traffic for SIA and Scoot outpaced the 2.8 per cent expansion in passenger capacity.

 

Passenger traffic, which measures the demand for an airline&rsquo s service and is derived by multiplying the number of paying passengers by the distance they have travelled, came in at 13.5 billion for the month, compared with 12.7 billion in the corresponding period last year. 

 

As a result, the group&rsquo s passenger load factor rose to 88.5 per cent, up 2.9 percentage points from the prior year. SIA posted a monthly passenger load factor of 87.4 per cent, and Scoot recorded 92.2 per cent for the same. 

 

The two airlines carried a combined total of 3.5 million passengers, 9.7 per cent higher than last year. 

 

Scoot carried a total of 1.2 million passengers, up 13.2 per cent from the year before, and SIA carried 2.3 million passengers, an increase of 8 per cent from July 2024. 

 

Cargo demand continued to be supported by front-loading activity, in anticipation of the uncertainty related to tariffs, noted the group. However, this was at a reduced pace compared with earlier months. 

 

Cargo loads increased by 2.1 per cent year on year, tracking slightly below the 2.7 per cent expansion in cargo capacity. As a result, the cargo load factor declined by 0.3 percentage point to 57.1 per cent. 

 

As at end-July 2025, the group&rsquo s passenger network covered 129 destinations in 37 countries and territories. SIA served 78 destinations, while Scoot served 73. 

 

The cargo network comprised 133 destinations in 38 countries and territories.

Enhanced scheme allows full KrisFlyer redemption on Scoot flights, a step up from the current cash plus miles redemption

 

[SINGAPORE] A new scheme to boost KrisFlyer redemption on budget airline Scoot would deliver benefits across the Singapore Airlines : C6L 0% (SIA) group, industry observers say.

 

Linus Benjamin Bauer, founder and managing director of aviation consultancy BAA & Partners, said the move is a &ldquo win-win&rdquo for Singapore Airlines group because it increases the value and strength of the KrisFlyer programme, while Scoot gains passenger traffic that is less price-sensitive. 

 

On Wednesday (Aug 13), Scoot introduced a revised scheme under which members of SIA&rsquo s popular miles loyalty programme can redeem flights using frequent flyer miles alone.

 

KrisFlyer members have been able to redeem flights on Scoot since 2015, but only if they use a mix of cash and miles. 

 

Scoot flights available include regional destinations, and also some medium and long-haul flights to Australia, Japan and Europe. 

 

On some routes, Scoot flights can be redeemed for significantly fewer miles than for Singapore Airlines flights &ndash in some cases, for less than a fifth of the miles required.

 

Loyalty programme 

Aviation analysts said the move would bolster KrisFlyer&rsquo s strength as a loyalty and frequent-flyer programme. 

 

Alan Lim, director at consultancy at Alton Aviation, said: &ldquo Allowing the redemption of KrisFlyer miles for Scoot award flights strengthens KrisFlyer as the frequent flyer programme of the SIA Group.&rdquo

 

He noted that not only does this offer bump up the number of destinations available through miles redemption, it is also more attractive than the previous scheme, under which tickets were redeemed on a miles-and-cash basis. Those were of lesser value than the full miles-only redemptions on Singapore Airlines.

 

Lim said: &ldquo It is key in helping to drive greater member engagement and the value of the programme to KrisFlyer members, while strengthening the KrisFlyer ecosystem,&rdquo he said. 

 

Loyalty programmes avoid incurring a cost when frequent flyer miles expire, but if this happens too often, it means members are likely not having enough ways to spend their miles before they expire. 

 

&ldquo This means lower engagement and a lower value proposition for the loyalty programme, and it makes it likely that such members would switch to another programme and airline,&rdquo he said.

 

Bauer also said that the move would improve KrisFlyer&rsquo s capacity to attract and retain members. 

 

&ldquo For a premium carrier, &lsquo stickiness&rsquo means that once a customer enters the ecosystem &ndash by booking flights, earning KrisFlyer miles, redeeming them across SIA Group brands, and perhaps holding a co-branded credit card &ndash the perceived value of staying loyal outweighs the temptation to switch to a competitor,&rdquo he added. 

 

&ldquo Integrating Scoot into the ecosystem, Singapore Airlines is no longer just the airline you fly for premium long-haul travel it becomes the travel platform you use for every journey: short-haul, low-cost, or premium.&rdquo  

 

He also said that the more customers use the programme, the more value they perceive it to have, thus making it harder for rivals to lure these customers away without the matching breadth and integration. 

 

Filling capacity

Scoot benefits by filling its empty seats and drawing a new customer base. 

 

While customers do not pay a fare for redeemed seats, the airline still benefits from such tickets as a result of partnerships and loyalty programmes, said Alton&rsquo s Lim. 

 

With a more attractive redemption scheme, Scoot could gain more passenger traffic than before, since miles-redeeming customers are less sensitive to price, said Bauer. 

 

&ldquo It gives Scoot access to price-insensitive demand &ndash customers using miles behave differently from cash buyers, and are less deterred by last-minute fares or off-peak timings,&rdquo he said. 

 

This could improve Scoot&rsquo s performance too. 

 

By tapping that segment, Scoot can close part of the load-factor gap without a downward spiral in cash fares, while SIA Group still captures value through loyalty engagement and incremental ancillary spend from those passengers, he added. 

 

Airlines need to fill a certain proportion of seats to break even on their costs, and this metric is known as the break-even load factor (BELF). 

 

Scoot&rsquo s BELF was 98.4 per cent for the quarter ended June. But the actual proportion of passengers carried &ndash its passenger load factor &ndash was 91.5 per cent. This works out to a gap of 6.9 percentage points, meaning it was operating at a loss on a per-seat basis. 

 

That gap could be filled by members redeeming tickets, which would add to revenue since they need to purchase extras such as a higher baggage allowance, food and other ancillaries. Scoot&rsquo s business model banks heavily on these its ancillary revenue per passenger is among the highest in Asia, noted Bauer. 

 

He added that Scoot could gain a small advantage over its regional competitors too. 

 

&ldquo Instead of competing purely on price in Scoot&rsquo s markets, (the group) is leveraging its loyalty currency as a differentiator, creating a switching cost that independent low-cost carriers cannot easily replicate,&rdquo he said. 

 

Analysts said they had no major misgivings of the revised scheme. 

 

Alton&rsquo s Lim said the lack of ScootPlus &ndash the carrier&rsquo s premium-economy class &ndash in the scheme was a small drawback to its overall comprehensiveness. 

 

Bauer said, however, that close management would be needed to avoid potential pitfalls. 

 

These include a reduction in revenue yields, caused by too many fare-paying passengers being displaced by miles-paying ones, or capacity problems resulting from too many seats being assigned to redemptions. 

 

If redemption passengers spend too little on ancillaries, the net benefit could be lower than expected &ndash and this could also run up costs for the group in accounting terms.