Published March 17, 2009

SIA passenger load factor falls below 70%

Aggressive capacity cuts fail to arrest impact of downturn

By VEN SREENIVASAN

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THE proportion of aircraft seats filled by Singapore Airlines last month fell to its lowest level in recent times, despite aggressive capacity cuts.

Linear projection: In the new financial year, SIA is set to cut up to 11 per cent of capacity by grounding 17 planes

The February load factor was just 69.7 per cent - down 7.1 percentage points from 76.8 per cent a year earlier.

Passenger carriage in revenue passenger kilometre terms fell 17 per cent during the month, outpacing a capacity reduction of 8.5 per cent in available seat kilometre terms.

The number of passengers carried sank a painful 20.2 per cent from a year ago, to 1.18 million.

The latest passenger load factor is significantly below SIA's last-declared breakeven level of 72.7 per cent for the October-November 2008 period.

If that number still holds true, SIA would have suffered a loss on its passenger side last month.

Aggressive capacity cuts have not been sufficient to offset a sharp downturn in business.

In recent months, SIA has scrapped some routes (Los Angeles via Taipei, Osaka via Bangkok, and Amritsar) and reduced frequency or introduced smaller planes (B777s for B747s) on others to try to match capacity to demand.

In the new financial year, it is set to cut up to 11 per cent of capacity by grounding 17 planes or about 15 per cent of its fleet, cutting routes and consolidating services.

'All route regions recorded declines in passenger load factors,' SIA said yesterday. 'The economic crisis has significantly dampened travel demand, translating to weaker uplifts. This is in contrast to the performance in February 2008, which was supported by Chinese New Year, Changi Airshow and an additional Leap Year day.'

The airline's cargo side also did badly in February, with the load factor falling to 62.1 per cent from 68.2 per cent a year earlier, as a 15.2 per cent drop in traffic in freight tonne kilometre terms outpaced capacity cuts.

The cargo breakeven load during SIA's October-December 2008 fiscal third quarter came to 63.4 per cent.

Besides parking planes, the airline has been negotiating with unions to get staff - especially pilots and cabin crew - to take no-pay leave during the current slowdown.

Twenty-five of its 300 cargo pilots have volunteered to take no-pay leave for up to 30 months. And more could take up the option in the coming months.

This is the first time in more than five years that the airline is asking aircrew to take extended time off.