No cow too sacred for SIA

Singapore Airlines (SIA) has finally hired women to fly its planes.

Two of them joined in August during the last intake of cadet pilots and will graduate from flying school in two to three years.

SIA is the last Singapore passenger carrier - and quite likely major global airline - to recruit women pilots.

The group's regional arm SilkAir and long-haul budget unit Scoot, as well as low-cost carriers Jetstar Asia and Tigerair, already have women in the cockpit.

They make up less than 1 per cent of the total pilot population in Singapore and just 0.1 per cent at SIA with the two new recruits. Globally, women account for about 5 per cent of all pilots.

SIA's decision to hire women pilots, for reasons it did not explain, is a long overdue step towards gender equality.

More important is the strategic significance of the move: Yet another sacred cow has been slaughtered under the Goh Choon Phong administration. To be sure, SIA's incumbent chief executive has slain many in his five years at the helm - quite possibly more than those who came before him.

From a pure focus on the premium long-haul sector, the airline has embraced a portfolio approach with equal weighting given to growing its different arms.

In the premium space, the parent carrier operates long-haul flights, supported by SilkAir's regional services. To tap the potential of the budget air travel market, SIA launched Scoot in 2012 to operate medium- and long-haul flights, and recently took control of Tigerair, which operates regional services.

The big plan is for all four airlines to work together, for example, to feed traffic to one another and to drive operational synergies. This is a major shift from the "all eggs in premium basket" approach that kept SIA flying high since its inception.

The next big change is a conscious move away from the core business to explore new avenues of revenue.

Earlier this week, SIA opened a new flight school at Seletar Aerospace Park - a joint venture with European plane maker Airbus.

The airline's engineering arm, SIA Engineering, is also setting up a joint-venture aircraft maintenance firm with American aircraft manufacturer Boeing.

The third transformation: Where once SIA probably thought it was in a class above the rest, Mr Goh has been relentless in striking partnerships with other like-minded carriers to offer customers a much wider network than SIA could ever possibly offer with its own planes and crew.

In just five years, the airline has grown its codeshare sectors - flights operated by partner carriers that SIA also sells to its own customers - from 2,000 to 8,000.

While the focus for SIA remains the Singapore air hub and growing operations out of Changi Airport, the airline knows well it must tap into other growth markets to keep growing. The push for a multi-hub strategy created two joint-venture carriers last year - Vistara in New Delhi and NokScoot in Bangkok.

Mr Goh summed it up nicely when he met reporters and analysts last October: "For decades, for 60-over years, SIA's success has been focusing on being full-service, focusing on the premium segment of the travel business, focusing on operations in Singapore, and focusing on just the core airline business," he said.

But market changes forced SIA to drastically rethink past strategies and slay sacred cows.

The global financial crisis of end-2008 dealt a serious blow to the airline, with the demand for premium air travel plummeting as corporate travellers - so critical to SIA's success - tightened their belts.

Economic recovery came, but with increasing competition from Middle East carriers and other rivals, SIA has not regained its past pricing power - nor does it look like it ever will.

This puts intense pressure on the bottom line and on SIA's top brass to think out of the box.

Truth be told, not many outside SIA were confident Mr Goh was the right man for the job when the airline announced in late 2010 that he would succeed Mr Chew Choon Seng as CEO. He was, prior to his new appointment, an unknown face to many in industry and media circles.

Five years on, Mr Goh has proven some naysayers wrong with his bold and trail-blazing steps. The question is whether he has improved the airline's financial health.

Data from the last three years shows some ups and downs, but SIA has been able to stay the course.

Total group revenues went from $15.1 billion in 2012/2013, to $15.2 billion the year after that and $15.6 billion in the last financial year.

During the same time, group operating profits jumped from $229 million to $410 million, but net profits dipped to $368 million from $379 million three years ago.

Earnings per share have been more or less constant.

With the pieces of Mr Goh's jigsaw settling nicely and jet fuel prices at about US$50 a barrel compared to US$120 at end-2014, SIA will reap substantial benefits and should be able to stay firmly on the recovery path.

How high it flies, though, will ultimately depend on everyone being on board.

"It's not a one-man job," said Mr Goh. "It takes the entire management team and, more important, all staff to be on board. There's no point one person charging ahead if nobody follows."

The skies have changed dramatically for SIA in the last few years. To keep cruising high, the airline must be prepared to reverse its flight path where necessary to avoid strong headwinds.

Only then can it remain a great way to fly.

This article was first published on April 23, 2016.
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