The head of one of the world’s most successful and highly regarded airlines, which is the 2023 ATW Airline of the Year, talks about steering out of the COVID crisis and long-term strategy.
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Rush Transcript
Karen Walker: Hello, everyone, and thank you for joining us for Window Seat Aviation Week Air Transport Podcast. I'm Air Transport World and Aviation Week Network Air Transport Editor-in-Chief, Karen Walker, welcome on board. And for this week's Window Seat, we've got a very special episode, indeed, because I'm in Singapore at the headquarters of Singapore Airlines, a world renowned international carrier with a great reputation for innovation and customer service. And I have the absolute honor to be joined by Mr. Goh Choon Phong, the CEO at Singapore Airlines. Mr. Goh, thank you so much for your time today. It's absolutely a delight to be with you.
Goh Choon Phong: Thank you very much. Thanks for having me.
Karen Walker: And the reason we're here is because Singapore Airlines has been selected as the Air Transport World 2023 Airline of the Year. So it's also my great pleasure to congratulate you in person for that very, very well-deserved award. Can I just ask you what your reaction was when we revealed that you had been selected?
Goh Choon Phong: Yeah, it's really exciting. We are both honored and very proud to be given this accolade, especially when the industry as a whole is just recovering from a devastating pandemic impact. It is a great recognition for the resilience and the indomitable spirit of the SIA people. It is also a great endorsement of the strategic decisions that we have made during and through the pandemic, which has allowed us to emerge stronger and to remain as one of the leading carriers in the world. I would also like to take this opportunity to express our deep appreciation for our very, very supportive customers, our shareholders, and other partners in the aviation industry.
Karen Walker: Of course, I'm based in Washington, DC, but I flew from New York to get here, and arrived at Changi Airport, and I could see, I mean, it's just really great to see a teeming airport, lots of people flying, and you've got a really great success story coming out of all of this Covid crisis. So we'll talk about that in a minute and where things are going with Singapore Airlines, but could I start by just asking you to just maybe just give me a sense of, when the pandemic first really hit and you could see the severity of this, what was your team's initial thoughts and plans, and how did things change here at Singapore Airlines?
Goh Choon Phong: Yeah, it was indeed a very difficult time. Also, because Singapore Airlines does not operate any domestic flights, we don't have a domestic market, everything is international, so when the international borders began to close in quick succession, we found that we are unable to operate to most of our destinations. At its worst, we were operating only about 3% of the pre-Covid capacity and carrying maybe 10,000, 11,000 people per month compared with 3.4 million in the usual carriage.
So it was very difficult. We were also burning 300 to 400 billion Sing dollars in cash every month, so one of the immediate priority is really to raise cash. We were fortunate that we have very supportive shareholders who came in and supported the rights issue that helped us raise 15 billion Sing dollars in terms of funding. And with that as a foundation, we were able to go further and raise another $7.2 billion, so total of $22.4 billion. So this is quite a lot.
At the same time, we reach out to aircraft manufacturers and suppliers to defer aircraft deliveries and payment. As a result, we were able to defer about 4 billion Sing dollars worth of aircraft payment from the first two years of the pandemic. We were getting our staff also to contribute by having lower pay. Pay cuts started with management and the bigger portions, but everybody participated and took the sacrifice.
Unfortunately, although we are probably one of the slowest in terms of conducting a retrenchment exercise, we nevertheless had to conduct one, and that is in September of 2020, we have to let go of about 2,000 people. We had minimized that through various means, including attaching staff full-time to other organizations within Singapore so that they can continue to work full-time and get full-time pay from these other organizations while remaining as an employee of Singapore Airlines. So those are the various things that we have done to try to mitigate the immediate impact of the pandemic.
Karen Walker: So, yes, I mean, that's a huge amount of money that you raised very quickly, but it sounds to me like there was long-term thinking there in that you knew you needed to get that amount of money, too, regardless of how long the crisis stood. So you had some long-term thinking there even when everything was happening very fast.
Goh Choon Phong: Indeed. The reason why we raised so much money, quite frankly, at the point nobody knew how long the pandemic would last, how long the borders would remain closed. So we were preparing ourselves for the borders to be closed for a fairly extended period of time, hence the amount of money we raised. This is also to give the rest of the organizations the peace of mind, the assurance, that they will continue to be able to work within Singapore Airlines and that they can concentrate on both taking care of customers in the meantime and also preparing for a recovery. And it's quite clear, even at the depth of the pandemic, we wanted to be first off the block when the recovery comes.
Karen Walker: And which you did as well, of course. Because now, if we come look to where we are now, you've recently posted a record revenue and profit. Scoot, the wholly owned subsidiary, the low-cost carrier subsidiary, similarly having a great performance here. What were the key enablers to that achievement to being able to turn from the situation you had described to now?
Goh Choon Phong: So the key reason why we're able to achieve record profit, record operating performance, it's really because we had the resources ready to operate and meet the pent-up demand when borders were opened. And the key reason for that was because we were able to mobilize core resources that we retained even during the worst of the pandemic.
So core resources for the airline involved both aircraft and people. We were retaining as many people as we can, as I mentioned earlier, about different schemes to retain them. At the same time, when we were operating at a lower capacity, we were utilizing much of the resources to keep them operationally ready. For example, when we are operating at 50% of pre-Covid capacity, we were actually rotating and using almost all the available resources, both aircraft and cabin crew and tech crew. And what that means is that whenever there is an additional opening in the border, we're able to put those resources to meet demand right away.
Karen Walker: And what I'm curious about here, it sounds like you always had faith that things would come back, however hard this got, and it did. You always had faith that the travel demand would come back. Am I right?
Goh Choon Phong: That is true. While we didn't know when it will come back, because in some sense it's a function of when the countries are comfortable to open up the border, we knew that the demand has always been there. We had been engaging our customers, even though they have not been flying with us, and they have told us their desire to want to travel and continue to support us. While we don't have a domestic market, we have also the benefit of observing how domestic market have come back so quickly when they're actually allowed to operate and when people are allowed to travel.
Karen Walker: And across Southeast Asia, now that we've seen the borders open up, as we say, we're seeing a very similar trend to what we've seen elsewhere as borders have reopened, lots of travel, lots of demand. So what are your focus areas now as Singapore Airlines in terms of focus areas for networks, destinations? What's the important thing for you in the next, say, 12 to 15 months?
Goh Choon Phong: If you look at what we have done during the pandemic, firstly, of course, we had to handle some of the immediate challenges, funding, cash flow, I mentioned earlier. We were very clear at the outset that we want to be first off the block and, therefore, the attendant measures that we've taken in conserving or retaining as much of the core resources as possible. But at the same time, we were also looking at what needs to be done, some of the strategic initiatives that we will want to continue to push, that would support the SIA group's growth and new opportunities beyond the recovery period.
An example is, for example, our involvement with Tata in the Air India deal. And everybody will be aware that we intend to work with the Tata and allow Vistara to be merged into Air India, and, in return, with some additional cash payment, to get 25.1% of Air India. Now, India is a huge market, and it is a fast-growing market. It is already the third-biggest travel market in the world. It is expected to double its size in 10 years. So it is an important growth engine for the future of SIA, and we obviously continued to engage and continued to pursue this growth opportunity during the pandemic period.
Similarly, you would've heard about our subsidiary airline Scoot's initiative to lease the Embraer E2 airplanes, nine of them. And that, again, would allow us to expand our footprint to secondary points in the region and provide even greater connectivity for our customers.
Karen Walker: So, yes, so you're definitely seeing those opportunities, and you were working on those all through the pandemic, while you were working in sort of crisis mode. Clearly, all of that work continued. So it sounds to me like you're very focused on still seeing opportunities, still seeing growth.
Goh Choon Phong: Indeed. We are definitely seeing the opportunity for growth. Of course, currently, some of these growths are still constrained because there are still some frictions in travel between certain countries. Some of them are in Asia, but we are quite confident that those constraints will eventually go away and that the growth will come back in a very strong manner.
Karen Walker: I'd like to just ask you one more last question, if I may, which is about leadership. At the end of the day, certainly when we're looking at sort of picking the airline of the year, you're looking for strong leadership, and that's definitely in abundance here at Singapore Airlines. How do you define leadership, and what are you most proud of your team through where it's been recently and where you're now going?
Goh Choon Phong: Yeah, you are absolutely right, Singapore Airlines has a very strong team. And while I have the privilege of leading this team, a lot of the decisions, especially with regard to strategic initiatives, are very well debated. And we harness the strength of all the participants or individuals to arrive at an approach that would best benefit the airlines, especially in the longer run. So it is not just an individual, it is really the team coming together and providing an outlook for the airline that is going to be stronger than ever before. So we will continue to develop this deep bench that we have; however, I would add that the most important aspects of this, to not just getting the plan right, is about execution, and execution will depend on our people. And we are fortunate to have people who are dedicated, who are innovative, who are agile, who are resilient. And really, that is what makes Singapore Airlines what it is today and what will ensure that we continue to be successful in the future.
Karen Walker: And it sounds to me, if I may say, that, for all the challenges, it's very much the impression I have had meeting you today, is that you're really so enthusiastic and passionate about this industry and about Singapore Airlines and your job, which I think says a lot. So, Mr. Goh, thank you. And again, congratulations on being the 2023 ATW Airline of the Year. It truly is highly deserved. And I'm personally looking forward to presenting the trophy to you at our awards gallery in Istanbul on June 2nd.
May I also thank our producer and, of course, thank you to our listeners. Make sure you don't miss us each week by subscribing to the Window Seat Podcast on Apple Podcasts or wherever you listen. And until next week, this is Karen Walker disembarking from Window Seat.
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