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Possible further reallocation of air rights for flight routes: analysts
SINGAPORE: Analysts say there may be further reallocation of air rights for routes between Singapore and other regional destinations.
It follows the unusual move recently by Singapore to shift some air rights for flights to Jakarta.
This was a boost to Tiger Airways at the expense of its rival Jetstar/Valuair.
Tiger Airways has been spreading its wings with more flights to Chinese cities.
Last week, it also took a bigger bite of the lucrative Singapore-Jakarta route - doubling the number of its flights there - made possible because it received extra air rights from Singapore authorities, which were reallocated from its rival Jetstar.
Observers say the move is highly unusual and could raise some uncertainty in the industry.
Deputy Asia editor, Flightglobal, Leithen Francis says: "I think the committee felt that they wanted to maybe reallocate some slots to give Tiger a double daily service so they can compete more effectively against Jetstar. But it could cause a little bit of uncertainty because I think once an airline gets traffic rights, they would like some surety that they are going to retain those traffic rights.
"Because to establish a new destination, a new route, involves a lot of investment and people and it takes time to generate the traffic. And once you do generate the traffic, then you'd want to get the return on your investment, and if you lose those traffic rights, then you lose your investment."
Before the move, Tiger had seven non-stop services a week on the Singapore-Jakarta route, while Singapore-based Jetstar Asia had 24 weekly flights.
With the reallocation, Tiger now gets 14 services a week, while Jetstar will have a reduced number of 17 flights.
Analysts say the move could set the precedent for rights on other routes to be tweaked, such as the lucrative Singapore-Kuala Lumpur sector.
Aviation analyst at Standard & Poor's, Shukor Yusof believes this may happen within the next 1.5 years.
Mr Yusof says: "In future there will be some tweaks, some alignments being made, realigning some of these flights to low cost carriers instead of niche carriers like SilkAir or even Singapore Airlines.
"People are more demanding, more aware in the differences in airfares, and people are getting used to flying budget air and for a 45-minute flight. They would want the most economical for their flights, rather than to fly big airlines. You can see some alignments being made now, SilkAir has taken over SQ as being the main carrier for the Singapore-KL sector."
Analysts believe that it may also take less than two years before the cap on air rights on popular Indonesian cities like Jakarta and Surabaya are raised to allow more flights.
Indonesia has given Singapore carriers only limited air rights because it wants to protect its own domestic carriers.
Still, analysts don't expect the reallocation of rights to affect Singapore's status as an air hub because it has many liberalised air services agreements with other countries that don't impose a limit on flights.
Singapore Air Traffic Rights Committee declined to explain its decision, but said there is no automatic renewal of rights for carriers.
These are assessed based on various criteria, including market conditions and the level of utilisation by the airline.
Jetstar says it's in talks to appeal the official decision. The results of the appeal are expected in two weeks' time.
Tiger Airways declined to comment on the issue.
The ATRC was established in 2003 to allocate Singapore's air traffic rights to Singapore carriers in a manner that maximises both the state interest as well as the benefits to the travelling public.
The ATRC is chaired by the permanent secretary of the Ministry of Transport, and includes senior representatives from various government agencies like the Singapore Tourism Board, Economic Development Board, International Enterprise Singapore, Attorney-General's Chambers and the Civil Aviation Authority of Singapore.
Taken off Channel News Asia
SINGAPORE: Analysts say there may be further reallocation of air rights for routes between Singapore and other regional destinations.
It follows the unusual move recently by Singapore to shift some air rights for flights to Jakarta.
This was a boost to Tiger Airways at the expense of its rival Jetstar/Valuair.
Tiger Airways has been spreading its wings with more flights to Chinese cities.
Last week, it also took a bigger bite of the lucrative Singapore-Jakarta route - doubling the number of its flights there - made possible because it received extra air rights from Singapore authorities, which were reallocated from its rival Jetstar.
Observers say the move is highly unusual and could raise some uncertainty in the industry.
Deputy Asia editor, Flightglobal, Leithen Francis says: "I think the committee felt that they wanted to maybe reallocate some slots to give Tiger a double daily service so they can compete more effectively against Jetstar. But it could cause a little bit of uncertainty because I think once an airline gets traffic rights, they would like some surety that they are going to retain those traffic rights.
"Because to establish a new destination, a new route, involves a lot of investment and people and it takes time to generate the traffic. And once you do generate the traffic, then you'd want to get the return on your investment, and if you lose those traffic rights, then you lose your investment."
Before the move, Tiger had seven non-stop services a week on the Singapore-Jakarta route, while Singapore-based Jetstar Asia had 24 weekly flights.
With the reallocation, Tiger now gets 14 services a week, while Jetstar will have a reduced number of 17 flights.
Analysts say the move could set the precedent for rights on other routes to be tweaked, such as the lucrative Singapore-Kuala Lumpur sector.
Aviation analyst at Standard & Poor's, Shukor Yusof believes this may happen within the next 1.5 years.
Mr Yusof says: "In future there will be some tweaks, some alignments being made, realigning some of these flights to low cost carriers instead of niche carriers like SilkAir or even Singapore Airlines.
"People are more demanding, more aware in the differences in airfares, and people are getting used to flying budget air and for a 45-minute flight. They would want the most economical for their flights, rather than to fly big airlines. You can see some alignments being made now, SilkAir has taken over SQ as being the main carrier for the Singapore-KL sector."
Analysts believe that it may also take less than two years before the cap on air rights on popular Indonesian cities like Jakarta and Surabaya are raised to allow more flights.
Indonesia has given Singapore carriers only limited air rights because it wants to protect its own domestic carriers.
Still, analysts don't expect the reallocation of rights to affect Singapore's status as an air hub because it has many liberalised air services agreements with other countries that don't impose a limit on flights.
Singapore Air Traffic Rights Committee declined to explain its decision, but said there is no automatic renewal of rights for carriers.
These are assessed based on various criteria, including market conditions and the level of utilisation by the airline.
Jetstar says it's in talks to appeal the official decision. The results of the appeal are expected in two weeks' time.
Tiger Airways declined to comment on the issue.
The ATRC was established in 2003 to allocate Singapore's air traffic rights to Singapore carriers in a manner that maximises both the state interest as well as the benefits to the travelling public.
The ATRC is chaired by the permanent secretary of the Ministry of Transport, and includes senior representatives from various government agencies like the Singapore Tourism Board, Economic Development Board, International Enterprise Singapore, Attorney-General's Chambers and the Civil Aviation Authority of Singapore.
Taken off Channel News Asia