Singapore’s No-Win Decision to Go All Business Class on Ultra Long Haul

I was going to follow up yesterday’s post with some more detailed notes from the US Airways Media Day, but then I figured you guys are probably sick of hearing about it. Maybe I’ll post it in the next couple of days.

Instead, let’s talk about the unenviable position Singapore Air is in. The airline announced today what had been rumored for some time. The five A340-500 aircraft that fly the ultra long haul LAX and Newark to Singapore routes will be converted to all-business class flying.

Sounds good, right? So why is it an “unenviable position”? Those planes have not exactly been the shining stars for the airline. Originally, that plane was expected to have greater range than it ended up having. Now, it can’t even make those routes nonstop with a full load. That’s why the airline has only 181 seats onboard with a mix of the old business class Spacebed and “Executive Economy” onboard right now.

08_03_04 sqflyingpig

I’m guessing they didn’t put First class on because the seats weighed too much. And though they’ll tell you that they put Executive Economy with more legroom onboard because the flight is so long and they wanted to offer a better experience, methinks the truth is that they just can’t put on any more seats and still make the flight nonstop. This plane is pushing it.

So, with fuel prices where they are, these flights must be absolute dogs. They can get a small premium for Exec Economy, but not enough to make up for the fact that there are only 181 seats on that dog of a plane. And they can’t get much in the way of a business class premium because they have the sub-par Spacebed on board instead of the amazing new business class product that they’re putting on the rest of the fleet.

Solution? Kill the Economy seats, put on 100 of the new business class seats, and hope you can charge like crazy for the privilege of sitting there.

SINGAPORE AIRLINES CABIN

Admittedly, this’ll be one heck of an experience to fly. Will it make money? Maybe. They can probably get away with jacking up fares significantly, but with only 100 seats onboard, that’s still going to be a stretch. My guess is that they still just don’t know what to do with those planes since they’ve never lived up to expectations.

Starting in mid-May, Newark will start getting the new interiors, and the transition will be done by the end of June. LAX will have the new configuration by late September. And if you’re booked on this plane in Exec Economy, they’ll rebook you on a one-stop flight. Now there’s a bummer. You’ll be back in regular economy and you have to add a stop.


15 Responses to Singapore’s No-Win Decision to Go All Business Class on Ultra Long Haul

  1. SeaFlyer says:

    They will probably need a 75% load at $4000 each-way per person to break even.

  2. Jason H says:

    I’m actually suprised that Singapore Air hasn’t publically demanded compensation from Airbus for failure to deliver a produce that met expectations.

  3. Bryan in San Francisco says:

    Which way to the passenger ship? Bring back ocean lines. :)

  4. seth says:

    I’m not completely convinced that it is a no-win endeavor. I cannot find a CASM number for SQ that is current, and the numbers will skew with the fewer seats on the plane since the fuel costs won’t actually drop, but it looks like the number is about $200K in cost for each direction. That would mean that 50% load at $4K would break even.

    Still, everything I’ve read basically says that the A340-500 is a beast to operate and cannot compete with the 777-200LR on CASM numbers, so the cost for running the flights has to be high enough to be a problem for them.

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  6. Mike says:

    I’ve got family in Charlotte. US Airways owns CLT. I enjoyed your posts about Media Day.

  7. Jeff says:

    Might be a good way to remove FF miles from their base via more upgrades as there will be many more biz seats on that sector now. But will you get that upgraded sensation (read: ego trip) if everyone else is in the same class??? If they do save some weight with only 100 c-class seats (a big maybe) they can carry more cargo – the high margin kind that is time sensitive. And you are right – there is no F class due to the weight of the seats (Thai had the same issue on their 345s).

  8. Winston says:

    Interesting article, but you need to add in three other factors that SQ considered before they made the decision to go all J-class on the 345.

    1) The new J-class seat is physically lighter than the older Spacebed product. This allows for revenue cargo to be flown to and from EWR & LAX (The current configuration does not allow for any cargo save for pax luggage.)

    2) Historically, the J class load factors on both SIN-LAX vv. and SIN-EWR vv. flights have been obscenely high for all flights, even after accounting for the sub-prime crisis. It’s the Y+ load factors that have been disappointing for SQ…

    3) SQ did a cost-benefit analysis on trading in the five 345s for the 777LR with Boeing. From all known accounts (check out the forums on airliners.net and sqtalk.com for more detailed explanations), SQ felt that the trade was not worth it.

    Hence, the decision to fit the 345 with an-all J-class product. Financially it’s the best decision for SQ, but on a personal note (I’m based in Tempe), it sucks big time for me because J-class is out of my budget, and Y+ from LAX-SIN is wonderful especially when it’s a short 17 hour flight over the small pond that is the Pacific…

  9. QRC says:

    Cranky! My man…finally an article about Asian airlines. When are you going to figure out that as an airline buff you should move over to Asia asap and ignore the loads of crap in the US? Imagine…HKIA filled to the brim with wide-bodies, airports that are actually convenient and seamless security, usually all the airports a pleasure to travel through, spacious, airlines that have offered beds in business class for a while (AA is making their intl business class seem like they’ve reinvented the wheel..when they’re really just rolling out what Cathay now calls their “old” business class). I’ll shutup about this now…back to SQ

    I’ve done that flight a few times in J, and it was packed each time. My colleagues frequently have to waitlist for it in J. I think your hunch is right about WHY they did it, but the demand for 100 J seats is definitely there and I wouldn’t be surprised if they can charge more. The SQ SIN-LAX and SIN-EWR flights are very high-yield, as are the CX HKG-JFK flights (CX HKG-LAX aren’t so much, because CX has overloaded the routes with 3 daily HKG-LAX in addition to UA, 2 daily HKG-SFO in addition to SQ and UA, and something like 17x weekly HKG-YVR). CX HKG-JFK might take the cake – a round-trip F class can sometimes cost $25k USD, and last month I paid $14k USD for HKG-JFK in J. Around the world tickets in F cost me about $15k or sometimes a little more, but I can include that leg. Or if I did TPE-HKG-JFK round trip instead the cost is like $10-11k in F the difference is that significant. No kidding – sometimes I can find cheaper F fares ex-TPE than J fares ex-HKG, so I just head to Taiwan, have two or three meetings there and then go to New York passing right back through HKG, where I live.

    What is my point? I think you’re right on the money about probably why, but the demand from Asian financial centers to LAX and New York is huge. Plus, sitting on the new SQ J class is pretty awesome, and that’s coming from someone who spends more time on CX than on the ground.

    Finally, not sure if this is related because I don’t know jack about the airliners themselves, BUT CX used to operate their 3 leased A340-600s on the HKG-JFK runs. It was a total disaster…those damn planes had tech delays every other flight I was on, and I do that route monthly. They have since removed them and exclusively use their new 777s (which is another cool story, did you see how the chief pilot of CX got booted a few weeks ago after doing a fly-by in Seattle taking delivery of a new 777?).

  10. Christopher Dye says:

    Your piece illustrates a puzzling paradox about SIA: It has a deserved reputation as a very well run airline but regularly has made bad fleet decisions. Initally they went with the MD-11, which they cancelled because it did not meet specs. They then went with the 340-300, which they also get rid off, this time because it was underpowered and could not climb fast enough over the Indian Ocean, something one would think they could have figured out before buying the plane. They replaced the 340s with 777-200ERs, oviously a great choice. Then instead of going with the -200LR which would have complemented the 777s they go back to 340s. One wonders why they would believe AB’s range/payload claims when the first 340s did not perform well. Then when they had the chance during the 787/350 negociations to replace the -500s with -200LRs at a reasonable price, they chose to stick with the -500. Finally, there is the 380-800, which it turns out has insufficient space for revenue cargo because passenger baggage takes up most of the below-deck hold, at least according to Steven Udvar-Hazy. Thus, perhaps SIA is not getting the freight revenue they wanted, again something they could have figured out ahead of time. Hazy wants AB to make the longer -900 the standard 380 so there will be enough baggage space, so SIA may be changing some of its -800s to -900s (even tho there will be many more passengers and their baggage on the latter). Go Figure.

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  12. CF says:

    Man, had I known what kind of great comments I’d receive when I start talking about Asian airlines, I would have started earlier!

    Everyone who is talking about breakeven loads – remember, fuel prices have spiked significantly lately, so any old breakeven numbers are now going to be much higher. Spreading that cost across only 100 seats will be ugly.

    Mike – I promise I’ll post the rest of my US Airways notes soon

    Jeff – I wouldn’t expect to be able to use your FF miles on this flight anytime soon. They’ve made availability extremely tight on other flights with the new business class if it exists at all. They’re going to need to sell each one of these seats.

    Jeff/Winston – You’re right, time-sensitive cargo might be able to hitch on ride on these flights now, but I’m not sure how much there is that would be willing to pay the premium. You don’t gain a ton of time by eliminating the stop, only a couple of hours. For most cargo, I don’t think it’ll make a difference.

    Winston – I tend to agree that this was the best decision considering what’s available to them right now. I’m just not sure it’s going to be profitable, but it very well may be the least unprofitable.

    QRC – Ah, but it’s no fun talking about all the great things Asian carriers are doing. It’s more fun talking about what a mess the airlines are over here. I don’t doubt that there is demand for these routes, but I wonder if enough high fare demand will be there to fill both of these flights everyday at a high enough price to make them profitable. We’ll see. And yes, I saw the video of the Cathay 777 flyby. That was one LOW pass.

  13. Albert says:

    We have it easy here in AsiaPac. Keep on blogging about the “mess” that is American carriers. Some of us are living vicariously through this blog! ;)

  14. It could be a case of milking it all for what it’s worth while they still can, considering that they might not really know what to do with it. With the reputation they have for flight service I am sure there will be no (huge) shortage of takers.

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