Demand for Cairns drives SilkAir to pursue further expansion

For the third time since launching service to Cairns just over two years ago, SilkAir is adding capacity to the Cairns market. SilkAir’s continued expansion on the Singapore-Cairns route is a testament to the route’s success and the overall strength of the north Queensland market.

SilkAir initially viewed Singapore-Cairns as an experimental route that it would not have launched if it were not for an attractive incentive package from local airport and tourism authorities. However, the route quickly proved to be successful in the few months following the 30-May-2015 launch.

SilkAir initially viewed Singapore-Cairns as an experimental route that it would not have launched if it were not for an attractive incentive package from local airport and tourism authorities. However, the route quickly proved to be successful in the few months following the 30-May-2015 launch.

SilkAir initially served Cairns with three weekly flights on a circular routing with Darwin, including two weekly flights on a Singapore-Darwin-Cairns-Singapore rotation and one weekly flight a Singapore-Cairns-Darwin-Singapore routing. SilkAir launched Darwin, its first destination in Australia, three years earlier in 2012 and continued to operate three weekly Singapore-Darwin-Singapore turnaround flights after commencing the three weekly flights that combined Darwin with Cairns.

Less than eight months after launching Cairns, in Jan-2016, SilkAir decided to decouple Cairns and Darwin effective 30-May-2016. Cairns was subsequently served with three weekly nonstop return flights, resulting in approximately a 50% increase in seats for the Cairns market as previously each flight was shared with the Darwin market. Capacity to Darwin was also increased slightly as Darwin was subsequently served with five weekly turnaround flights compared to three weekly turnaround flights and three shared flights.

Offering a nonstop product on all flights led to a surge in demand to and from Cairns. This prompted SilkAir to add more capacity in the Cairns market during the last southern summer season with a fourth frequency operated from late November to mid-January.

The seasonal fourth flight was successful, leading SilkAir to add capacity to Cairns during the peak months of the current southern winter season. The Singapore-Cairns schedule for this winter includes four weekly flights for June and five weekly flights for July and August before reverting back to three weekly flights for September and October (the last two months of the winter schedule).

Strong bookings on the additional flights this summer has convinced SilkAir to offer five weekly year-round flights. The airline recently announced a new permanent five weekly flights schedule for the Singapore-Cairns route from Nov-2017.

SilkAir’s one-way weekly non-stop seat capacity from Cairns to Singapore: May-2015 to Dec-2017

Source: CAPA – Centre for Aviation & OAG

Cairns Airport CEO Norris Carter welcomed the extra flight, saying it will offer an excellent increase in connectivity for international visitors to Cairns and Great Barrier Reef. “The Singapore service has gone from strength to strength since it commenced. It attracts European, Chinese, South East Asian and Indian travellers, who make up almost 60 per cent of all international visitors to Cairns.”

As Blue Swan outlined in a recent report, SilkAir also has decided to make Singapore-Cairns one of the first routes for its new fleet of 737 MAX 8s. The improved efficiency of the 737 MAX 8, particularly on long routes such as Singapore-Cairns, likely contributed to the decision to go with five year-round frequencies.

The 737 MAX 8 is expected to be introduced on Singapore-Cairns at about the same time the route is upgraded to five year-round frequencies. SilkAir is slated to take delivery of its first 737 MAX 8 in late Sep-2017 and plans to have three aircraft in its fleet by the end of 2017.

As Blue Swan highlighted in the last report, the 737 MAX 8 will enable SilkAir to improve its premium product in the Cairns market. SilkAir is configuring its 737 MAX 8 aircraft with 144 economy seats and 12 business class seats. Its fleet of 737-800s, which is used on all the current Cairns flights, are configured with 150 economy seats and 12 business class seats. With the 737 MAX SilkAir is reducing the size of the economy cabin by cutting out one economy row to provide improved pitch in the business class cabin.

The more spacious business class cabin should be well received by premium passengers flying to and from Cairns, as well as corporates, given that most of the Singapore-Cairns flights operate overnight. Singapore-Cairns, which is approximately seven hours in duration, is also one of the longest narrowbody routes in the world.

Cairns did not have a nonstop link to Singapore for nearly a decade. Prior to SilkAir the route was last operated by Australian Airlines, a leisure airline subsidiary of Qantas which suspended operations in 2006. Australian Airlines operated single class 767s.

The advent of new generation narrowbody aircraft is a game changer for thin seven hour routes such as Singapore-Cairns. The route should be able to support in future a daily service with the 737 MAX 8.

While Singapore-Cairns is a relatively small market, SilkAir and its parent Singapore Airlines are able to offer connections throughout Southeast Asia as well as to South Asia and Europe. SilkAir and SIA enjoy a strong position in the Cairns market as it offers the shortest total transit times for passengers heading from Cairns to a wide range of international destinations.