SIA inks first code-share deal with Chinese airline

Singapore Airlines has signed its first code-share deal with a Chinese carrier.

The tie-up between SIA/SilkAir and Shenzhen Airlines means the companies can sell seats on each other's services.

This doubles the SIA group's capacity to two return flights a day to Shenzhen.

Industry analysts called it a positive though long overdue move to expand its reach in a key market.

Mr Brendan Sobie, a Singapore-based analyst at the Centre for Asia Pacific Aviation, called on SIA to do more still.

"They should be looking for an equity play in China" and strike more partnerships, he said.

There are good opportunities for a broader Air China-SIA relationship, Mr Sobie suggested.

Both are members of the Star Alliance group of carriers which Shenzhen Airlines - partly owned by Air China - also joined late last year.

On why SIA did not muscle in on the China market earlier, spokesman Nicholas Ionides said: "We are constantly looking at ways to extend our network to better serve our customers, but the appropriate opportunity did not arise earlier."

He would not say if talks are on with other Chinese carriers, adding that such discussions, if any, are confidential.

China is a key market and SIA will continue to focus on enhancing its operations there, Mr Ionides said.

The last big push for a piece of the Chinese market was in 2008 when SIA made a bid for Shanghai-based China Eastern.

It failed when shareholders of the Chinese carrier voted against the deal.

With high fuel prices, tough competition from rival carriers and a slowdown in Europe and the United States, SIA is feeling the heat.

In the year to March 31, the airline made a net profit of $378.9 million which was 12.8 per cent higher than a year ago.

But this was mainly on the back of an increase in non-operating items such as surplus on the sale of aircraft and spare engines.

When he met journalists on Friday - a day after the results were unveiled - SIA's chief executive officer Goh Choon Phong flagged China, India, South-east Asia and Australia as key focus markets.

As a group, SIA has boosted the number of services to China from 78 flights a week in 2010 to 133 this year.

The growth has outpaced the airline's expansion in the other key markets, Mr Goh said.

Budget carrier Tiger Airways - a third owned by SIA - is also planning to expand its China business, said its Singapore boss, Mr Ho Yuen Sang.

"China and Indonesia are our focus markets for now," he said.

"We fly to Shenzhen, Guangzhou and Haikou but plan to add more destinations. Hopefully we can do one more by the end of the year."

karam@sph.com.sg

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