SIA says it may start new low-cost carrier

SINGAPORE: Singapore Airlines (SIA), its finances strained by the Severe Acute Respiratory Syndrome (SARS)-triggered fall in passenger traffic, said yesterday it may set up a new low-cost airline rather than convert its regional arm, SilkAir, into a budget carrier. 

Asia’s biggest airline by market value said a specially formed task force reporting to the chief executive had been working on the idea of a low-cost, no-frills airline. A decision on the project would be made this year. 

SIA, which is 56% owned by the Singapore government, launched a global campaign on Monday to cut fares by half for travel to Singapore for the period June 16 to Aug 31 in a bid to revive passenger traffic. 

The airline saw its overall load factor fall 13.6 points to 58.7% in April from 72.3% in the same month a year ago – the fourth consecutive drop on a year-on-year basis. 

SIA's move to consider starting a new low-cost carrier comes after it revealed plans to raise cash through a debt issue, triggering speculation it may seek up to US$1bil. 

Shares in the airline closed 50 cents higher at S$10.90 yesterday. The shares have risen nearly 7% since the start of the year but still underperformed the key Straits Times Index by about 3% during the period. 

As early as February, the airline had said it could launch a regional no-frills carrier in a very short period if competitors tried to launch one. – Reuters  

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