Singapore Airlines (SIA) scrapped its almost 19-hour non-stop service between Singapore and the New York area, nearly a decade after it was first launched.
The route’s demise was chalked up to a couple of key factors.
When the service was introduced in 2004, crude oil prices were at US$50 (S$67) to US$60 per barrel. By June 2008, they had reached an all-time high of more than US$140 per barrel.
While prices dropped to around US$50 per barrel at the end of 2008, they returned to the US$80 to US$110 per barrel range by mid-2009, where they remained till late 2014.
This caused airlines’ fuel bills – often the largest component of their operating costs – to skyrocket. And the fact that the route was operated using the gas-guzzling A340-500 aircraft didn’t help.
Also, SIA was initially using a two-class configuration with 117 premium economy and 64 business class seats. In 2008, this was re-configured to 100 business class seats and no premium economy cabin.
It proved a wrong move when the financial crisis hit and business travel demand slumped.
These circumstances combined made the route unprofitable and led the airline to finally pull the plug at the end of 2013.
FAST FORWARD TO THE PRESENT
Fast-forward to 2018 and SIA has announced that it will be resuming its Changi-Newark non-stop service – the world’s longest commercial flight – this October, amidst a flurry of similar ultra-long-haul routes being launched by various airlines over the past couple of years.
Some challenges remain. Fuel prices, though lower than the 2013 levels, are on the rise.
According to the International Air Transport Association (IATA), global jet fuel prices have risen 50.3 per cent year-on-year to US$90.4 per barrel as of Jun 1. Bloomberg data shows that Singapore jet fuel prices are back up at their highest levels since 2014.
Still, a lot has changed and there’s good reason to be optimistic that SIA will succeed.
New, fuel-efficient aircraft are improving the viability of ultra-long haul flights. In March this year, Qantas launched their Perth-London service using the Boeing 787-9 Dreamliner.
Singapore Airlines will operate the Airbus A350-900ULR between Singapore and New York, which is expected to deliver considerably better route economics than the A340-500.
NEW CABINS APPEAL TO BUSINESS TRAVELERS
The cabin configuration has also changed. SIA’s A350s have been fitted with 67 business class and 94 premium economy seats, compared with the post-2008 A340 configuration which had only business class seats.
The 100 per cent premium seat mix makes sense, since business travelers are a key demographic for non-stop flights – these are the passengers who value a shorter travel time the most, and they’re willing to pay extra for this benefit.
The inclusion of premium economy will allow SIA to attract business travelers whose corporate travel policies don’t permit them to fly business class.
These flights can drastically reduce airport layovers and unfavourable scheduling. This means companies and their business travelers can make smarter budgeting decisions when comparing the higher ticket cost on an ultra-long-haul flight versus the additional hotel nights that might be necessary on a trip categorised by multi-segment flights.
Seen in this light, companies can potentially reduce their expenditure on employee travel by including ultra-long haul options in their travel programmes.
And with better lighting, higher ceilings, and improved air quality, the new aircraft being used on ultra-long-haul routes also provide a more pleasant cabin experience that reduces fatigue and improves productivity and well-being – another big plus for business travelers.
As a result, demand for ultra long-haul flights is growing. The number of such flights has nearly tripled to 19 over the last decade, according to air travel intelligence company OAG.
In particular, they have generated a lot of interest from the business travel community, with many companies including these routes as part of their corporate fare negotiations with airlines.
BENEFITS TO AIR HUBS LIKE SINGAPORE
For traditional hub airports like Singapore’s Changi Airport, ultra-long haul flights present both challenges and opportunities. On one hand, we could see their relevance as stopovers disappear when they are not the end-destination in themselves.
The flipside is that business travel originating in Singapore and similar hub markets could see tremendous benefits – for example, the ability to reach both coasts of the United States from Singapore in one flight can drive business to the major airlines servicing the hubs, and thus bring greater passenger footfall to the airports.
Changi Airport’s investment in its infrastructure looks smart in this context, and the focus it has placed on traveler experience and the swift entry and exit from the airport will likely be a major point of differentiation.
Vibhav Singh is senior consultant at CWT Solutions Group, the consulting arm of travel management company Carlson Wagonlit Travel.