Australia holds up well under softer economy

The Australian says that a weakening Australian dollar and a softening economy has yet to diminish the appetite of Australians for overseas travel, according to Singapore Airlines’ new local chief.

Subhas Menon, Singapore Airlines (SIA) regional vice-president for south-west Pacific, said the airline had not seen any drop in volumes as a result of the fall in the dollar.

Mr Menon said that while travel agents were expecting some reduction in volumes because of the weaker dollar, no one had seen it happening.

“That’s probably because Australia is not alone in seeing the value of its currency drop,” he said. “Many of the receiving markets have also seen their currencies drop — like the pound for instance — and it is still beneficial for Australian to travel to these countries.”

But Mr Menon said there were some signs that passengers were “trading down” from one class to another.

“Previously, people used to fly more frequently in first class, now perhaps they are flying more in business class,” he said.

“And business travellers also, they may travel once in business class and the rest of the time in economy class.”

Despite this, overall volume was still growing, although perhaps not as quickly as last year.

“We were with one of the consolidators just now and he was telling us that last year they grew by 30 per cent and this year they are seeing a growth of 10-12 per cent but it’s still growth,” Mr Menon said.

While there were some worries in Australia about high interest rates and an end to the property boom, Mr Menon said the economy was still strong and Australia appeared to be a marching to the beats of a different drum.

He said the more optimistic outlook was one of the first things he noticed when taking on his new position from predecessor Paul Tan in July.

His arrival came after a long and varied career with SIA that began in the company’s commercial supplies department in 1984. He quickly moved to product development, before a stint with international relations, where his responsibilities included Australia, and then to marketing in 1995.

He was appointed the airline’s general manager in Italy and, three years later, its top man in Germany.

In 2001, he moved to head Singapore’s wholly owned subsidiary, Silk Air, before moving to Los Angeles in 2004 and becoming regional vice-president for the Americas for more than three years. Last July, he returned to Singapore and looked after the West Asia-Africa region before being posted to Australia.

Mr Menon said the airline had established a healthy profile in the local market. It enjoyed 11 per cent of the market share and was the second-biggest international carrier after Qantas — a position SIA did not enjoy in any other markets, he pointed out.

Mr Menon said a positive orientation towards Asia in Australia also augured well for the carrier.

“I would say that the outlook generally is quite positive,” he said. “That’s not to say that some of the things that are happening in the rest of the world will not eventually have an impact on Australia. But I think if we keep our fingers on the pulse, we will still be able to tap the Australian market to good effect.”

Singapore last year became the first airline to fly the Airbus A380 to Sydney and Mr Menon said the airline would like to see it fly to other destinations, particularly Melbourne. That, he said, could happen in the first quarter of 2010.

But the big focus of SIA, he said, would be on product enhancement. He cited the airline’s move to replace older 777s on the Brisbane run with new A330s.

Asked about the airline’s push to get access to routes between Australia and the US, Mr Menon said Singapore was not in any particular rush.

“We understand that the Australian Government has many considerations on its plate, but we are very hopeful this will happen,” he said. “It cannot be that liberalisation does not come to this market place.”

He said Singapore had open skies agreements with the US and Britain that allowed it to operate between any point in either country as many times as it wanted and fly beyond them to other destinations.

Australia was the last hold-out of the restrictive regimes, he said. “Right now there doesn’t seem to be any clarity on this issue.”

Mr Menon said the US market would remain underserved even with V Australia starting on the route. “The impact of competition cannot be understated,” he said.

“The minute we said we were interested in the route, Qantas added flights.”  “And they are still doing well on the route, the fares are still high and the planes are still full.”

A Report by The Mole