SIA looking to store some planes as travel demand evaporates

Singapore

SINGAPORE Airlines (SIA) is studying storing some of its planes - such as its double-decker Airbus A380s - as it cuts capacity from its network amid a dearth of travel demand, The Business Times understands.

With the number of Covid-19 cases spiking globally and countries tightening their borders, airlines worldwide have been slashing capacity, grounding planes - and in some cases - scrambling for state support as they grapple with an unprecedented crisis.

Likely to be grounded first by SIA are some of the jumbo A380s, which are far less fuel efficient than next-generation aircraft such as the A350 and Boeing 787-10, sources and industry watchers told BT. Potential locations mooted for storage include the United States.

In response to queries from BT, a spokesperson for SIA said on Sunday that the airline was assessing the impact of capacity cuts on its network and would make any announcements when necessary.

Among the world's carriers who have already reportedly stored planes are Lufthansa, Delta Air Lines and American Airlines.

Meanwhile, the SIA group's budget unit Scoot is reportedly poised to cut 99 per cent of its flights for the next two weeks, joining rival Jetstar Asia which announced last week that it would suspend all services until at least April 15, effectively grounding its narrow-body fleet of 18 A320s. Scoot did not respond to queries from BT by press time.

The Singapore government's latest travel restrictions, which will prevent short-term visitors from entering or transiting through Singapore, will bring a virtual halt to air traffic to Singapore, pointed out independent analyst Brendan Sobie of Sobie Aviation. "It's clear, with these latest measures, the SIA Group will have to reduce capacity by at least 90 per cent."

Last week, the SIA group announced it would reduce 50 per cent of its capacity up to the end of April, but warned that more cuts would be coming.

Mr Sobie expects the global A380 fleet - not just SIA's - to be grounded by the end of March. Mr Sobie added: "The A380s are inefficient and have way too much passenger capacity, given current demand. The A380 has less cargo capacity than a 777. In addition to storing the A380s, SIA could accelerate the retirement of older model 777s and A330s."

Mr Sobie also reckons that SIA could end up using some of its 777 passenger aircraft exclusively for cargo to help meet cargo demand amid the drastic reductions in passenger flights, which normally account for over half of SIA's cargo uplift.

As at Dec 31, 2019, the parent airline had a fleet of 134 planes, which included 19 A380s. SilkAir had 26 planes and Scoot, 48 aircraft.

Following the issues with Boeing's 737 Max, SilkAir reportedly already stored six of its B737 Max aircraft last year at Alice Springs Airport in Australia's Northern Territory, where the dry climate is seen as more conducive for aircraft storage than Singapore's wet and humid weather.

Shares in SIA closed at S$6.02 on Friday, down 10 cents.

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