Singapore Airlines (SIA) hopes to reap more ancillary revenue from its digital services, namely the KrisFlyer membership program and the KrisShop e-commerce platform, as the company nears the end of its three-year transformation plan.

CEO Goh Choon Phoong said the KrisFlyer program earned the airline S$700 million in the fiscal year ended March 30, up 18% year-over-year (YOY). About 70% of the revenue comes from over 200 merchant partners and has been attracting “good quality members,” now surpassing 4 million, he said. He added that the first half of FY2019/20 has seen similar growth rates and the total revenue is “promising.” 

Goh said KrisShop is moving away from traditional inflight duty-free shopping to an e-commerce platform. Previously an outsourced entity, SIA now has 70% ownership of the platform and has integrated it into the airline since November 2018. He expects the platform to earn SIA Group $60 million in revenue for this fiscal year, which is 30% more than it earned in the previous model.

Goh also provided a summary of other strategies the flag carrier is focusing on.

Introducing new fuel-efficient aircraft types is the fastest and most tangible way to be environmentally sustainable, and has opened new routes and markets, he said. The North American market has increased 35% YOY in terms of passenger traffic since the introduction of the Airbus A350-900 ultra-long range aircraft. Currently flying nonstop to New York, Seattle, Los Angeles and San Francisco, SIA will increase weekly frequencies from 40 to 56 flights. However, the US flight has a much higher crew requirement and contributed to an 11.7% YOY increase in total staff costs in the first half.

SIA still expects its first of 20 Boeing 777-9s to be delivered in FY2022/23 despite technical difficulties uncovered by Boeing in recent months, and Goh said it will feature “industry leading products across all classes.” 

He said the recent agreement with Malaysia Airlines (MAB) is one of the many partnerships that increase the value proposition of the airline. Unlike agreements with the Lufthansa Group or Air New Zealand for long-haul routes, the challenge of the MAB deal is how to find a win-win solution within the same small region.

“We have no experience with the Malaysian authority and have no idea how long the regulatory approvals will take,” he said. “But we expect between nine to 12 months for a deal like this to be approved.’’  

Chen Chuanren, chuanren@purplelightvisuals.com