May 17, 2019 superfreak8

​SIA Group to lease jets amid 737 Max grounding

The Singapore Airlines (SIA) Group will lease 10-12 Airbus A320 family jets for budget unit Scoot as it works to deal with the continued grounding of the Boeing 737 Max 8.

During the carrier’s results presentation, chief financial officer Stephen Green showed a slide detailing the group’s fleet plan for the next 12 months. Altogether, SIA, Silkair and Scoot’s fleet will increase from from 202 on 31 March to 207 at the same time next year.

Absent from the fleet plan was the 737 Max 8. Owing to the global grounding of the type following two fatal crashes that killed 346 passengers, the six 737 Max 8s in Silkair’s fleet have been sitting idle at Singapore’s Changi International airport since 12 March. The airline also has 31 examples on order.

“Silkair had expected that it would take delivery of nine 737 Max 8s, but we’re assuming that this is not going to happen in the course of this financial year – but this of course could change,” says Green.

“As a consequence, Silkair will hold onto the 737-800NGs in order to maintain its network. We had planned to move the NGs to Scoot. This means Scoot’s fleet will not increase with that new 737, so we’ll be looking for a replacement aircraft that will probably lead to leasing.”

Even with the Max grounding, Green says that capacity across all three airlines will grow capacity about 6% in the next financial year.

The 737 Max 8 is particularly important for SIA’s strategy of integrating regional unit Silkair into main SIA brand. The company intends to upgrade Silkair’s service, including the addition of a new cabin product with lie-flat beds on the forthcoming 737 Max 8s. This service upgrade will set the stage for Silkair’s brand being rolled into that of SIA.

SIA chief executive Goh Choon Phong says the integration of Silkair with SIA is still going ahead as planned, and the fitting of the lie-flat product should remain on track to start in 2020.

“We expect that timeline to continue to be maintained at this point,” says Goh. “But if we ask if there is any effect resulting from grounding of the 737 Max, at this point in time it’s not something we can give an assessment on. But all the integration efforts are progressing.”

Asked whether a prolonged 737 Max grounding might prompt SIA to retrofit its 737-800s with the lie-flat product, Goh replied that the company is still committed to the integration of Silkair into SIA and that lie-flat seats are a key part of this.

Another potential challenge that he touched on is the eventual lifting of the grounding. Even if the Civil Aviation Authority of Singapore (CAAS) lifts the grounding, the airline’s use of the 737 Max will largely depend on the type’s status in other jurisdictions. A situation in which the CAAS lifts the grounding , but where countries such as China and Indonesia do not would “severally limit” the carrier’s ability to deploy the aircraft.

Goh was also asked about how the airline plans to change public perceptions of the safety of the Max when it does re-enter service.

“It is an evolving situation,” he responded. “Boeing has to address those concerns not just to authorities, but also, for example, address the concern of pilots who are going to fly the plane, and certainly the public. We will have to see things develop and we will make a decision accordingly.”


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