Singapore Airlines Ltd. (SIA) will end non-stop services to New York’s Newark Airport and Los Angeles, the world’s longest commercial flights, next year because of rising fuel prices and slower demand for intercontinental trips.
The all-business-class flights will end in the fourth-quarter of next year, the airline said in a statement yesterday, as it announced an order for 25 Airbus SAS aircraft. The Toulouse-based planemaker will acquire the five four-engine A340-500s used on the routes as part of the deal.
The end of the almost 19-hour Newark service will leave Singapore Air travelers facing a five hour longer trip to New York, as the carrier’s alternative route goes to the city’s JFK airport via Frankfurt. The airline is canceling the non-stop services, which started in 2004, as businesses cutting costs hit long-haul travel.
“There has been significant erosion in premium-class fares between Asia and U.S. and loads are lower,” said Timothy Ross, an analyst at Credit Suisse AG in Singapore. “Those are hitting the revenue line.”
Average premium-seat fares between Asia and the U.S. were 4.8 percent lower in September than a year earlier, according to data compiled by Bloomberg. Fuel prices have jumped more than 30 percent in the last two years. Cathay Pacific Airways Ltd. has also this year pared capacity plans on long-haul routes including to North America.
Singapore Air’s direct services probably failed to match the 80 percent-plus load factors achieved by the rest of its flights to the U.S., said Ross, who has flown on the non-stop routes.
“Direct flights are preferable to one-stop flights” for travelers, he said. The Newark service is about 9,000 nautical miles (16,700 kilometer) long, while the Los Angeles one is 7,609 nautical miles.
“Singapore would somewhat lose its appeal” to business travelers who prefer the ability to rest on their flights, said Ahmad Maghfur Usman, a transport analyst at OSK (Asia) Securities in Kuala Lumpur. “For a consumer, it boils down to convenience and timing.”
Singapore Air rose 0.3 percent to S$10.68 at the close of trading today. The stock has risen 5.1 percent this year, compared with a 16 percent increase for the Straits Times Index.
The carrier has added more seats to New York and Los Angeles using A380 superjumbos, which have more capacity and less range than A340s. The carrier yesterday said it plans to order five more A380s along with 20 two-engine A350-900s. The deal is worth $7.5 billion a list prices, it said.
“Although disappointing that we will be halting these services, we remain very committed to the U.S. market,” Chief Executive Officer Goh Choon Phong said in the statement. “Over the past two years, we have increased capacity to both Los Angeles and New York. We will also continue to explore additional options to enhance our U.S. services.”
Singapore Air already has a fleet of 19 A380s. The carrier operated the world’s first commercial flight with a superjumbo in 2007.
Airbus halted production of the A340 last year, less than 20 years after the aircraft’s commercial debut. That made it the planemaker’s shortest-lived aircraft program. The company only sold 377 A340s, less than half the tally for the A330, with which it shared a production line, according to data on its website.
The A340 failed to compete with the A330 and Boeing’s 777, which only have two engines. Fewer powerplants reduces fuel burn and operating costs, while also cutting how far planes can fly. The A340-500 can travel about 9,000 nautical miles, compared with the 5,950 nautical mile range for an upgraded version of the A330-300 that is in development, according to Airbus’s website. Boeing’s 777-300ER can go as far as 7,930 nautical miles. All three planes carry about 300 to 400 passengers in a standard configuration.
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