Singapore Airlines is continuing its search for regional partners and investors in Northeast Asia to spur its growth, according to industry sources. It recently announced it was relinquishing its acquisition bid for a stake in Korean carrier Jeju Air.
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Singapore Airlines has been investing in the Indian and Australian aviation markets to boost earnings. Its Jeju Air bid, which it relinquished on August 13, was the first investment attempt in the Northeast Asia. Analysts say it will likely shift its focus to China and particularly on how to enter the mammoth Chinese market.
One industry analyst said: “Singapore Airlines disappointed observers when it gave up its acquisition bid for low-cost carrier (LCC) Jeju Air as the Korean and North-Pacific LCC markets are extremely promising, but it appears that the China market has become a much bigger priority for it. It now needs a Chinese partner to assist its entry into China’s domestic market and plug into new passenger sources. However it hasn’t even found a Chinese carrier to be its code-sharing partner yet.”
Singapore Airlines has also indicated it is open to receiving a strategic investment but hasn’t mentioned any potential investors or partners.
Singapore Airlines and its regional wing Silk Air currently conduct services to 11 Chinese cities. A code-sharing agreement with a Chinese carrier would allow it to conduct sales for its partner and an investment by a Chinese partner would allow it to adjust its flight schedule.
A CAPA analyst said: “Although Singapore Airlines and Silk Air can fly directly to Chinese cities, it’s impossible for them to cover all the cities in the country and the Chinese domestic market is a huge playing field for its expansion.”
He singled out Air China as a perfect partner for Singapore Airlines as both carriers are Star Alliance members and Air China has a vast domestic air route network. However Singapore Airlines's competitor Cathay Pacific holds a 20% stake in Air China and would block any partnership attempts from its rival.(Translation by David)
