From your archive: The Silk Road

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Singapore Airlines’ regional carrier SilkAir recently marked seven years of flying to Australia. This March 2017 story from the Australian Aviation archives charts the first five years of SilkAir’ s operations in the country, which began with nonstop flights to Darwin in March 2012.

A supplied photo of SilkAir pilot and cabin crew. (SilkAir)

When SilkAir launched flights to Darwin in 2012, comparisons with Jetstar in this {part of the|section of the|area of the} world were in some ways inevitable.

After all, the Australian travelling public {had become|came into existence} all too aware of the differences {between the|between|involving the} legacy Qantas and its low-cost offshoot since the Orange Star came to life in 2003, particularly in terms of the passenger experience.

Like Jetstar, SilkAir is also a subsidiary of a larger parent, in this case Singapore Airlines (SIA).

While being associated with such a well-regarded and much patronised airline {in Australia|nationwide} has its advantages, SilkAir manager for northern Australia Chen Qing Yi explains SilkAir in the early days struggled to shake off the public impression that being a subsidiary of Singapore Airlines meant it was a low-cost, or budget, operation.

“ {The work|The task|The job} of the pioneers of the Darwin station was really to go out {and correct|and address|and deal with} that brand image {that people|that individuals|that folks} had of us, ” Chen tells Australian Aviation {in an|within an|in a} interview on the phone from Darwin in early February.

“ That has worked well, {we have|we now have|we certainly have} seen our passenger numbers increase through the years.

“ That’ s why it’ s important {we have|we now have|we certainly have} a local team right here, {that we|that people|that individuals} go out and get the sales and educate people {on our|on this} value, products and connectivity. ”

In contrast to what Jetstar is to Qantas, SilkAir is a full-service carrier that serves meals, has inflight entertainment (streamed to personal devices) and includes checked baggage with every business and economy class ticket, {as well as offering|and also gives} interline and through-check {options for|choices for|selections for} travellers on multi-stop itineraries.

It is described within the airline group – which also includes the soon-to-be-merged low-cost carriers Tigerair Singapore and Scoot – {as the|since the|because the} “ regional wing of Singapore Airlines”.

And it has an important role {in the|within the|inside the} SIA group’ s network, given its narrowbody aircraft are able to serve secondary cities within six and a half hours’ flight time from Singapore more economically and with {an appropriate|a suitable|a proper} level of capacity than Singapore Airlines’ all-widebody fleet.

Cairns and Darwin are two Australian {examples of|samples of|types of} this network role, with SilkAir also flying to places such as Vientiane and Luang Prabang in Laos, as well as the likes of Lombok and Medan in Indonesia.

There are also {a growing number of|an increasing number of|progressively more} ports that are served jointly by both Singapore Airlines and SilkAir, such as Kuala Lumpur, Kolkata and Yangon.

Aviation thinktank CAPA – Centre for Aviation describes some of SilkAir’ s destinations as markets where it is difficult to generate high loads on a year-round basis but are important to maintain given their role in the overall SilkAir/Singapore Airlines network.

“ On most of its thinner routes a majority of passengers {connect to|connect with|hook up to} flights operated by SIA, the parent airline, ” CAPA said in a research note dated January 22.

“ While SilkAir may not have high loads on some of these routes, the connecting passengers they generate can be crucial {for the|for that|for your} viability of SIA long-haul routes.

“ Using both the Singapore Airlines and SilkAir brands, while avoided several years ago, is an evolutionary strategy as it enables {the group|the girls} to match capacity best with demand in a now-diversified market where LCCs have proliferated.

“ {In some cases|In some instances|Sometimes} SilkAir has taken over underperforming SIA frequencies, and in other cases SilkAir has been {used to|utilized to|accustomed to} grow the overall market, with additional narrowbody frequencies supplementing widebody flights that have been maintained. ”

Figures from CAPA show SilkAir has expanded its route network from 26 destinations in 2006 to 52 currently.

Capacity, measured by available seat kilometres (ASK), doubled between 2008 and 2016. The airline now flies to all 10 Association of South East Asian Nations (ASEAN) member countries.

{Despite this|Regardless of this|Naturally} furious pace of growth, SilkAir has reported {an annual|a} operating profit for 15 consecutive years dating back to 2002, CAPA said, although expansion had impacted yields –   average fares per passenger  – {and load|and cargo} factors in recent times.

SilkAir posted an operating profit of S$30 million for the three months to December 31, down from S$33 million in the prior corresponding period.

SilkAir celebrates the start of flights to Darwin in 2012.

SilkAir celebrates {the start of|the beginning of} flights to Darwin {in 2012|this year|news}.

Northern Australia routes doing well

SilkAir celebrates five years of operating to Australia in March, having started services to Darwin on March 26 2012 with four flights a week.

The route went to {five times|5 fold} weekly in 2014 and currently operates with a split schedule featuring either red-eye or afternoon departures from Darwin , depending on the day of the week.

In May 2015, SilkAir added Cairns , with an initial three flights a week operating via a Singapore-Darwin-Cairns-Singapore routing.

A measure of the route’ s success {was the|was your} move to de-link Cairns and Darwin {in May|in-may} 2016 , a year {after the|following the|following your} inaugural service touched down in North Queensland.

Further, SilkAir {vice president|vp} commercial Ryan Pua says Cairns will move to four flights a week from June, while a fifth weekly service will be added {for some|for a few|for a lot of} peak months.

“ Since decoupling, {both the|both|the} Singapore-Cairns and Singapore-Darwin routes have performed well, tracking internal projections, ” Pua tells Australian Aviation via email.

“ Direct services to Darwin and Cairns have provided passengers with greater convenience and shorter flight times, as well as added capacity to support increased demand, as compared to {the initial|the first|the original} circular routing. ”

Cairns is also a special case in the SilkAir network, given it is the only destination where pilots and cabin crew overnight after the six-hour, 45 minute flight from Singapore. Crews perform a direct return on all other city-pairs, including Darwin.

Chen says Darwin’ s split schedule allows SilkAir to offer a wider variety of connections beyond its Singapore hub, with London Heathrow {the most popular|the most famous|the most used} destination for outbound travel from Australia.

The MI804’ s 0610 arrival in Singapore is timed for passengers travelling to {just about anywhere|just about anyplace|almost anyplace} within South-East Asia, while MI802, which lands in Singapore at 1900, is ideally suited for those {travelling to|visiting|going to} Europe and South Asia.

“ {The reason why|The key reason why|Exactly why} we have the split schedule, again is because we want to better suit the needs of the market, ” Chen says.

“ I should also mention as well the afternoon flight connects very well {to our|to the} flights to India. We do have a lot of Indian passengers flying with us back to India and it is more for visiting friends and relatives or they are flying their relatives over to visit them {because they are|as they are|since they are} working here. ”

Bureau of Infrastructure, Transport and Regional Economics (BITRE) figures show SilkAir carried 38, 000 inbound passengers to Australia {for the|for that|for your} 12 months to June 30 2016, up 63 {per cent|%|percent} from the prior corresponding period.

The 2015/16 average load factor was 74 per cent, compared with 68. 3 per cent for the prior year.

{The number of|The amount of|The quantity of} outbound passengers jumped 75 per cent to 42, 021, with load factors 11. 5 percentage points higher at 82. 1 {per cent|%|percent}.

And in {an indication|a sign|the} of the airline’ s expansion in this market, SilkAir operated 317 flights in 2015/16, a 43 per cent increase from 222 flights {the prior|the last} year.

Silkair Boeing 737-800 9V-MGJ is welcomed at Cairns Airport in May 2015. (Cairns Airport/Youtube)

Silkair Boeing 737-800 9V-MGJ is welcomed at Cairns Airport in May 2015. (Cairns Airport/Youtube)

SilkAir’ s Cairns and Darwin services, like Singapore Airlines’ flights to Adelaide, Brisbane, Canberra, Melbourne, Perth and Sydney, are supported by the alliance with Virgin Australia . When Scoot’ s Gold Coast flight {is included|is roofed}, the airline group serves nine cities in Australia, {the same|exactly the same|a similar} number as Air New Zealand.

The John Borghetti-led Virgin places its VA airline code on all Singapore Airlines and SilkAir flights {out of|from|away from} Australia, as well as throughout the pair’ s Asian and European services.

{There are also|Additionally, there are|You can also get} reciprocal frequent flyer benefits, including lounge access, priority check-in and boarding, {as well as the|along with the|and also the} ability to transfer points (or miles) between the Singapore Airlines/SilkAir KrisFlyer program and Virgin’ s Velocity Frequent Flyer.

Chen, {who has|that has|who have} been based in Darwin since March 2015, says the codeshares, as well as access to Australian domestic destinations beyond Darwin and Cairns, have helped attract more passengers onto SilkAir’ s services.

“ We are privileged {to be|to become|to get} alliance partners with Virgin Australia because what they do is they provide us the reach into the domestic market {that we|that people|that individuals} otherwise would not have, ” Chen says.

“ This provides passengers. {We are|We have been|Our company is} talking about connectivity and {accessibility to|option of} international flights. ”

Virgin serves Alice Springs , Brisbane, Melbourne, Perth and Sydney nonstop from Darwin, where it opened {a premium|reduced} passenger lounge in March 2015. It also offers nonstop flights from Cairns to Brisbane, Melbourne and Sydney.

A file image of a SilkAir Boeing 737-800 at Cairns. (Andrew Belczacki)

A file image of a SilkAir Boeing 737-800 at Cairns. (Andrew Belczacki)

Cairns Airport {chief executive|leader} Norris Carter says SilkAir is a valued international airline partner, given the number of overseas travellers it brings {into the|in to the|to the} city and surrounding region.

“ The service attracts European, Chinese, South-East Asian and Indian travellers, who make up almost 60 per cent of all international visitors to Cairns, ” Carter tells Australian Aviation via email.

“ The access for Indian visitors has supported a 22 per cent increase in {visitors to|people to|surfers to} Cairns from that country {and more|and much more|plus more} international visitors overall {to arrive|to reach} on international flights. ”

In addition to Singapore, Cairns also has year-round international flights to Bali, Osaka and Tokyo (Jetstar), Papua New Guinea (Air Niugini) and Hong Kong (Cathay Pacific and Hong Kong Airlines), {as well as|and also|along with} Manila and Auckland (Philippine Airlines). Air New Zealand, China Eastern, China Southern and Jin Air {also offer|also provide|present} seasonal flights to Cairns.

SilkAir airport signage. (Jordan Chong)

SilkAir on track for all-Boeing fleet by 2020

In November 2012, SilkAir announced it would transition from Airbus A319/320s {to the|towards the|for the} Boeing 737, putting pen to paper for 23 current model 737-800s and 31 737 MAX 8s.

The order was a high-profile “ win” for Boeing – given SilkAir’ s position {as a|like a|being a} premium full-service carrier {in the|within the|inside the} fast-growing Asian region – and one that left executives at Airbus bitterly disappointed.

The first SilkAir 737-800 arrived in February 2014. Currently the airline has 31 aircraft – 17 737-800s, 11 A320s and three A319. This is up from 24 aircraft {at the end of|in late} 2014, the last full year the airline operated an all-Airbus fleet.

The company recently converted its last six 737-800 orders to the MAX, with the {first of|to begin|initially} the new generation Boeing narrowbody due to arrive in the third quarter of calendar 2017.

While Pua says he is unable to offer {any information|details} on specific routes the MAX will be used for, the SilkAir executive indicated the aircraft’ s improved economics and operating performance could open the door to additional Australian services.

“ With the arrival {of the|from the|in the} MAX and the longer range it offers, there is definitely {potential for|possibility of|prospect of} further expansion to more cities within Australia, ” Pua explains.

SilkAir is phasing out its Airbus fleet. (Rob Finlayson)

SilkAir is phasing out its Airbus fleet. (Rob Finlayson)

SilkAir A319s have 128 seats (eight business and 120 economy), while the A320s have 12 business and 138 economy seats for a total of 150.

{As a consequence|As a result|Because of this}, SilkAir has not only grown capacity and expanded its network through new aircraft, the transition to Boeing equipment has also meant more seats on existing routes, given the 737-800s have 162 seats – 12 in business and 150 in economy.

Pua says SilkAir is {comfortable with|confident with|more comfortable with} the use of the larger gauge 737‑ 800s and 737 MAX 8s in place of the smaller A319 and A320.

There is also the prospect of new cabin products being unveiled {for its|because of its|for the} soon-to-arrive MAX fleet.

“ In terms of capacity, we have factored in the {replacement of|replacing} the Airbus aircraft {in our|within our|inside our} overall resource and deployment planning, ” Pua says.

“ {There will be|You will see|You will have} some product and service enhancements introduced for the new MAX 8 aircraft, {of which|which|that} the details will be announced {in due course|sooner or later}. ”

Both Cairns and Darwin are served with the 737-800.

SilkAir is a full-service carrier with drinks, food and checked baggage included in each ticket. (Jordan Chong)

SilkAir is a full-service carrier with drinks, food and checked baggage included in each ticket. (Jordan Chong)

Closer integration needed to unlock more benefits: CAPA

Pua says SilkAir’ s focus is to provide feed to and from the SIA network via the airlines’ Singapore hub, taking into account the long-term positive prospects of the cities, and calibrating supply with demand.

“ We have been the pioneers to venture into diverse, secondary destinations in Asia, some of which {are still|continue to be|remain} relatively untouched by mass tourism, ” Pua says.

“ Our role here is to seed and develop these destinations for the SIA group, tapping on the potential traffic {offered in|are available|come in} new markets. ”

While the two carriers already work together selling connecting itineraries, coordinating on joint pricing and optimising flight schedules for maximum network connectivity, CAPA argued {there was|there was clearly|there is} scope to do more.

“ SIA and SilkAir have pursued closer integration over the past several years, {which has|that has|which includes} benefited both airlines, ” CAPA said.

“ However , there is still too much separation – particularly given the number of routes {the two|both|the 2} airlines now share.

“ Further integration could be pursued in 2017, including merging of the SIA and SilkAir sales teams. Having separate commercial teams with separate sales targets no longer makes sense, given {how the|the way the|how a} networks are now aligned.

“ The current structure means SilkAir sales offices overseas are now putting {too much|a lot of|an excessive amount of} emphasis on selling SilkAir flights to Singapore and SilkAir connections, rather than connections {on the|around the|within the} SIA network. ”

And while Singapore Airlines is a member of the Star Alliance, SilkAir is not, a situation {which has|that has|which includes} at times caused confusion for passengers transiting through Changi Airport to or {from a|from the|from your} Star Alliance flight (for example arriving on a Lufthansa service from Frankfurt and connecting onto a SilkAir-operated service to Phuket) regarding frequent flyer benefits such as lounge access.

{By contrast|In comparison|By comparison}, Hong Kong-based Cathay Pacific and its regional subsidiary Cathay Dragon are both members of oneworld, ensuring a consistent passenger experience for oneworld airline frequent flyer members.

Pua declined {to answer|to reply to|to resolve} directly when asked why SilkAir was not a member of Star Alliance. Instead, {he would|he’d} only say passengers travelling on the regional carrier could earn points on Singapore Airlines’ KrisFlyer frequent flyer program.

The formal handover of SilkAir's first 737-800 in Seattle in 2014. (Boeing)

The formal handover of SilkAir’ s first 737-800 in Seattle in 2014. (Boeing)

This story first appeared in the March 2017 edition of Australian Aviation. To read more stories like this, {become a member|are a member} here .

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