Tuesday, February 17, 2009

SIA to ground 17 jets

THE rapidly shrinking travel market has forced Singapore Airlines to ground 17 planes and cut more flights.

The airline has also begun talks with its unions on ways to reduce staff costs, including having employees go on no-pay leave, retire early, work fewer days and take a pay cut.

Details of the flight cuts, to take effect from April, have not been released yet, but they will add up to shedding 11 per cent of capacity over the coming financial year, which begins the same month.

Over the weekend, for example, SIA announced that it would suspend its thrice-weekly flights to Vancouver, after 20 years of flying there. People heading there will have to take another airline.

SIA grounded aircraft only once before - six years ago, after the Sars outbreak hit travel sharply. Fewer than 10 planes were taken out of service then, for about six months.

With the much gloomier outlook now, the 17 planes - mainly older Boeing 747s and 777s - will be out of service for at least a year. SIA has 102 planes.

For passengers, the changes from April mean fewer flight options. SIA has already announced cuts to destinations in India, China, Australia and Europe, among others. More schedule changes will be announced once they are finalised, it said yesterday.

For months, airlines have been grappling with one crisis after another: first the high fuel prices last year, then the effects of the economic downturn. Experts warn that the worst is yet to come.

In December, international passenger traffic fell 4.6 per cent, compared with the same month in 2007, while cargo volumes slid 22.6 per cent.

The situation is especially bleak for Asia-Pacific carriers, with passenger traffic plunging 9.7 per cent - the steepest decline in any part of the world.