The Singapore government has promised to look at giving up control of national carrier Singapore Airlines (SIA). Transport minister Yeo Cheow Tong says the government will consider divesting its stake if there are "good reasons" to do so. It controls around 57% through investment arm Temasek Holdings.
The comments came days after SIA chairman Koh Boon Hwee called for a global easing of airline ownership restrictions. "I may be overly optimistic, but I am hopeful that if governments look at the problems facing the industry in light of recent events, they may be more willing to ease regulatory and ownership constraints that have acted as a strait-jacket on the industry's development over the past decade," he said.
SIA has for years been pursuing a strategy of buying into other airlines, but with mixed results. It acquired 25% of Air New Zealand two years ago, but early this year had its stake cut to just over 4% after the carrier was renationalised to save it from collapse.
Its biggest overseas investment is in Virgin Atlantic Airways, although many believe SIA paid far too much for its 49% stake two years ago. Virgin was badly affected by a drop in transatlantic business after 11 September.
Koh says SIA will continue with its investment strategy despite its difficulties. "We will look for appropriate opportunities and joint activities around the world. In ideal conditions, we would like to have management control of investments," he adds.
"The relaxation of current regulatory and ownership constraints will lead to a healthier industry made up of fewer but stronger players," he says. "If this was allowed - and the market was allowed to work naturally - airlines should be in a much better position to earn sufficient returns, and plan for the longer-term, rather than remaining exposed to the vicissitudes of the economic cycle."
Source: Airline Business
