Singapore Airlines tries to stimulate demand for new US nonstops with very low initial premium economy fares

Singapore Airlines (SIA) has engaged in heavy discounting in attempt to drum up demand for its new nonstop services to the US.


Highlights

  • SIA has been offering premium economy return fares on its new Singapore-US nonstop flights for less than USD1000 for travel in October and November;
  • Premium economy fares starting at below USD1500 are also available for travel the first three months of 2019;
  • While economy one-stop fares between Singapore and the US are sometimes available for less than USD700, such low premium economy fares are unheard of and highlight the challenges that SIA face in filling up a very large premium cabin on its new A350-900ULR fleet

Singapore Airlines (SIA) has engaged in heavy discounting in attempt to drum up demand for its new nonstop services to the US.

SIA offered for one week (until 19-Sep-2018) a promotional SGD1328 (USD969) all-in premium economy return fare for Singapore-Los Angeles and SGD1428 (USD1042) for Singapore-Newark. The sale undercut by a few hundred dollars an earlier promotion after the two new nonstop routes initially went on sale for the first time.

The SGD1328 and SGD1428 fare were only available for travel from 22-Oct-2018 to 8-Nov-2018 for Singapore-Newark and 2-Nov-2018 to 15-Nov-2018 for Singapore-Los Angeles. SIA is re-launching Singapore-Newark on 11-Oct-2018 and Singapore-Los Angeles flights on 2-Nov-2018 using its new fleet of A350-900ULRs. SIA last served both routes in 2013, using inefficient A340-500s in a 100-seat all business configuration. SIA is taking delivery of seven A350-900ULRs, which will be configured with 94 premium economy and 67 business class seats, over the next three months.

See related report: Singapore Airlines confirms new US schedule, increasing its premium offering

The Singapore-US market is extremely competitive with other airlines sometimes offering one-stop economy fares below SGD1000. However, SIA’s premium economy promotion is cheaper than regular economy on most other airlines. One-stop premium economy fares in this market are typically at least USD2000 – and are often more than USD3000.

SIA should have a competitive advantage as it will be the only airline offering a nonstop service from Singapore to Los Angeles and New York. However, the fares that have been offered in the first couple of months suggest that SIA is unable to command a premium. The decision to go with such a large premium economy cabin (94 seats) could be impacting its pricing ability.

While the ridiculously low SGD1329 and SGD1428 premium economy fares were only valid for a short time, SIA is also offering low premium economy fares on the new US nonstop flights for travel in 1Q2019, including SGD1998 return for Singapore-Newark, SGD1868 for Singapore-Los Angeles and SGD1878 for Singapore-San Francisco.

SIA has operated a daily nonstop flight to San Francisco since Oct-2016 using three class A350-900s (economy, premium economy and business class) and is adding three frequencies on 28-Nov-2018 using the new two class A350-900ULR fleet. SIA will therefore have a total of 10 weekly nonstop flights to San Francisco. It will also have 10 weekly nonstop flights to Los Angeles and seven flights to Newark.

SIA is also offering business class promotional fares on the new US nonstop routes for travel in 1Q2019. The business class return fares start at SGD5838 for Singapore-Los Angeles, SGD6228 for Singapore-San Francisco and SGD6348 for Singapore-Newark. There are cheaper fares on other airlines (starting at less than SGD4000 on Chinese carriers) but these still represent good value and indicate SIA has to discount from its normally high business fares to fill up the large business class cabin on the A350-900ULR (67 seats).

For point of sale US, return fares are available on Los Angeles-Singapore for USD1449 in premium economy and USD4252 in business. For Newark-Singapore return fares are available from USD1499 for premium economy and USD5099 for business. SIA is also currently offering discounted frequent flier mile redemption rates for all its US nonstops.

SIA’s unusually low fares could be an attempt create some buzz ahead of next month’s launch of Singapore-Newark, which will be the longest flight in the world. SIA has already generated significant publicity by announcing these flights and will generate more PR as the Singapore-Newark launch flight and the first Newark-Singapore flight will be filled with media. However, filling the 45,080 weekly premium seats in the US market that the new A350-900ULR fleet will generate will not be easy regardless of the publicity and hype. Fares are likely to remain low, particularly for the unusually large premium economy cabin.