The Business Times

SIA goes full throttle with Formula 1

Airline will be title sponsor for the Singapore Grand Prix for 2 years

Nisha Ramchandani
Published Tue, Apr 15, 2014 · 10:00 PM
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[SINGAPORE] Singapore Airlines (SIA) is swooping in as title sponsor for the Singapore Grand Prix - taking over from telco group SingTel - as it seeks to ride on an iconic sporting event watched by millions across the globe.

The two-year partnership between the globally renowned Singapore brand and the local leg of the Formula 1 (F1) championship - which has made waves the world over for being the only night race - is expected to reap benefits for both, in addition to the local tourism scene.

SIA joins countless established companies which have taken the plunge into the glitzy world of F1, including Rolex, Shell, UBS and even airlines such as Abu Dhabi's Etihad, Dubai's Emirates and Bahrain's Gulf Air.

"We think there is a right fit at this point in time, that our network will be able to add value to this event (and) get more people to attend this event," said SIA chief executive Goh Choon Phong at the sidelines of a press briefing yesterday morning. "At the same time, this is a marquee event for F1, so it will also be beneficial from the brand name perspective to be associated."

Each year, the Singapore Grand Prix is beamed to nearly 90 million viewers worldwide on average who tune in to catch the season's only night race - dubbed the jewel in the F1 crown by head honcho Bernie Ecclestone.

Mr Goh added: "Anything that brings more tourists to Singapore - it benefits the country, it benefits us."

This comes as the luxury carrier battles a challenging operating environment, in the form of cut-throat competition from rival airlines and budget carriers, as well as volatile fuel prices, which have put pressure on yields.

Thus, marketing tie-ups such as F1 packages between race organiser Singapore GP (SGP) and SIA are a no-brainer, considering that some 200,000 tourists travelled to Singapore for the race over the five-year period spanning 2008-

2012. This has generated around $150 million in incremental tourism receipts per year on average. Meanwhile, SIA has access to a client base of premium travellers, which undoubtedly would prove useful to SGP.

Last year, some 87,500 three-day passes were sold in total to both locals and tourists, who hailed from 116 countries. Typically, visitors come from countries such as Australia, Germany, the United Kingdom, Japan and China. However, SGP executive director Michael Roche is keen to develop other non-typical source markets such as India, where SIA is planning to launch a full-service airline this year together with Tata.

While the airline declined to comment on the price-tag that will come with being the headline sponsor, it is said to be close to what SingTel forked out during its six-year run as title sponsor. Official figures were never disclosed, but it is believed that the telco paid in the region of $10 million-$15 million per year.

"It worked very, very well for (SingTel) but in any sponsorship, to try and hold them for a lifetime isn't really a realistic thing," reasoned Mr Roche, in response to a question on why SingTel decided to bow out. "I think SIA can expand it more because they are a global brand whereas SingTel had many diffusion brands that weren't under the SingTel brand - they couldn't take it further. We will still work with SingTel on a local basis to market and get to the Singaporean heartlands." In response to queries from BT, SingTel's country chief officer (Singapore), Allen Lew, said: "We are delighted to have had the opportunity to showcase Singapore to the world, strengthening SingTel as a global brand and bringing the Formula One closer to Singaporeans with our activities, heartland roadshows and SingTel Grid Girls. We are pleased to see that another flagship Singapore brand will be taking over the reins."

The Singapore Grand Prix is now in its seventh year (Sept 19-21) after the nation inked another five-year deal in 2012 to host the race till 2017.

Earlier editions of the race have typically cost some $150 million annually, with SGP - backed by hotel tycoon Ong Beng Seng - putting up 40 per cent and the government, the rest. However, Minister in the Prime Minister's Office S Iswaran had said in 2012 that the cost of hosting subsequent races could come down by about 15-20 per cent. At the time, he pointed out that cost-savings would come from various sources - not just franchise fees, but also operational efficiencies and alternative revenue streams.

Shares in SIA closed at $10.45 yesterday, up eight cents.

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