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.

SIA offered for one week (until September 19, 2018) a promotional SG$1328 (US$969) (FJ$ 2,049) all-in premium economy return fare for Singapore-Los Angeles and SG$1428 (US$1042) (FJ$2,203) 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 October 11 to November 8, for Singapore-Newark and November 2, to November 15 for Singapore-Los Angeles. SIA is re-launching Singapore-Newark on October 11, and Singapore-Los Angeles flights on November 2 using its new fleet of A350-900ULRs.

SIA last served both routes in 2013, using inefficient A340500s 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.

The Singapore-US market is extremely competitive with other airlines sometimes offering one-stop economy fares below SG$1000 (FJ$1,548). 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 US$2000 (FJ$ 4,229) – and are often more than US$3000 (FJ$ 6,343). 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 SG$1329 (FJ$2,057) and SG$1428 (FJ$2,211) 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 first quarter, 2019, including SG$1998 (FJ$3,094) return for Singapore-Newark, SG$1868 (FJ$2,893) for Singapore-Los Angeles and SG$1878 (FJ$2,909) for Singapore-San Francisco.

SIA has operated a daily nonstop flight to San Francisco since October 2016 using three class A350-900s (economy, premium economy and business class) and is adding three frequencies on November 28, using the new two class A350900ULR 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 first quarter 2019.

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 SingaporeNewark, 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 A350900ULR 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.