DAVID KNIBB SEATTLE
Singapore Airlines (SIA) has confirmed its interest in launching a domestic Australian airline, but its timing could depend on the terminal access dispute between Virgin Blue and Sydney airport.
Dr Cheong Choong Kong, SIA's chief executive, confirms that SIA has studied the prospect of starting an Australian domestic and concluded it is an "interesting" and "viable" option. Australia is only one of SIA's potential opportunities, says Cheong, but adds: "The Australian market is extremely important to us."
Cheong is unwilling to say if or when SIA might proceed, but he says a shortage of reasonably priced seats on flights from Sydney to Melbourne or Brisbane "featured prominently in our study".
Virgin Blue's impasse with Sydney airport could affect SIA's plans. Virgin Blue's ability to mount a serious challenge to Qantas Airways is being hampered by its row with Sydney over terminal access. Virgin Blue has refused to move into the former Ansett terminal, dubbed Terminal 2, because of a dispute over terms, which is still pending in court. Terminal 2 has room for Virgin Blue to expand, while its standalone Domestic Express terminal is at capacity.
Underscoring its dilemma, Virgin Blue is cutting back peak period flights to and from Sydney to reduce the number of passengers using its terminal from 850 per hour to 650, a number more suited to the terminal's design. If Virgin Blue prevails in its lawsuit, it will move into Terminal 2. If it loses, it will enlarge its cramped terminal. But the trial of its case against the airport is not slated until March, and appeals could delay a decision even longer. In the interim, Virgin Blue has filed a second action asking the Australian Competition and Consumer Commission to arbitrate its dispute.
As Australia's largest source of origin and destination traffic and the country's leading hub and gateway, Sydney is the key to any airline's growth. With more jet deliveries, Virgin Blue is adding flights that bypass Sydney and is scheduling more Sydney flights at non-peak times. But it is frustrated that it is having to woo business flyers into its cramped terminal.
Meanwhile, Qantas has moved most QantasLink regional flights into Terminal 2, freeing up more space in its own Terminal 3 for growth. Three regional airlines have also moved into Terminal 2, which still has room for other airlines.
Virgin Blue's handicap at Sydney could encourage SIA to think more seriously about an Australian launch. As part of its earlier evaluation, SIA inquired specifically about the availability of Terminal 2 gates.
Source: Airline Business
