Nonstop Wellington-Singapore could prove viable despite low take-up on Singapore Airlines’ one-stop product

19 July, 2017

The Sep-2016 launch of flights by Singapore Airlines (SIA) has led to a more modest than expected increase in international traffic for Wellington Airport. The Wellington-Canberra sector of SIA’s new Wellington-Canberra-Singapore route has also struggled somewhat with an initial load factor of less than 65%. However, the Wellington-Singapore market could still potentially support a nonstop service in future as demand for Wellington-Canberra-Singapore been impacted by a less than ideal product.

SIA began serving Wellington on 20-Sep-2016 with a four times weekly service via Canberra using 266-seat 777-200s. SIA became only the fifth foreign airline serving Wellington Airport, joining Fiji Airways, Jetstar, Qantas and Virgin Australia. Canberra became only the sixth scheduled year-round international destination for Wellington, joining Brisbane, Gold Coast, Melbourne, Sydney and Nadi.

SIA’s 2,128 weekly seats in the Wellington market gives it a 10% share of total international seat capacity at Wellington, well behind Air NZ, Qantas and Virgin Australia but ahead of Fiji Airways and Jetstar. However, Wellington has not seen a corresponding 10% increase in international passenger traffic sine SIA entered the Wellington market. International passenger traffic at Wellington was up only 1.7% in the first four months of 2017 to 376,000.

SIA carried slightly over 43,000 passengers to and from Wellington in the first eight months of serving the New Zealand capital (Sep-2016 through Apr-2017). Of these passengers, approximately 23,000 were originating or heading to Singapore and approximately 20,000 originated or were heading to Canberra, according to Australia BITRE data.

SIA’s average load factor on Wellington-Canberra was approximately 64% in the first eight months. This equates to an average of 170 passengers per Wellington-Canberra flight. On an average Wellington-Canberra flight, there have been slightly more than 90 passengers flying through Canberra to Singapore and slightly less than 80 passengers getting off in Canberra.

SIA could potentially upgrade its Wellington service to nonstop once Wellington completes an extended runway project, which would be able to accommodate flights to Asia and North America. While SIA would need a lot more than 90 passengers per flight to make a nonstop Canberra-Singapore route viable, a nonstop product would attract a significant higher volume of traffic than its current one-stop product.

A Singapore-Wellington nonstop product would attract a significant higher volume of traffic than its current one-stop product.

SIA’s new one-stop same plane service in the Wellington-Singapore market does not provide a significantly faster option than any of the other longstanding one-stop options. All the other one-stop options are also served daily, which is often necessary to attract business passengers who require flexibility in their schedule.

SIA’s Wellington-Singapore one-stop flight is slightly over 13 hours from Wellington to Singapore and slightly over 12 hours from Singapore back to Wellington. There are also 13 hour one-stop connections available in both directions via Auckland and Christchurch on the Air New Zealand-SIA joint venture.

SIA operates Singapore-Christchurch while SIA and Air NZ both operate Singapore-Auckland. Air NZ and its subsidiaries provide a frequent domestic service from Auckland and Christchurch to Wellington. Air NZ places its code on SIA’s Wellington-Singapore one-stop service via Canberra but most of its Wellington-Singapore passengers prefer to fly via Auckland.

SIA and its partners also offer 13 hour one-stop options via other Australian cities including Brisbane, Melbourne and Sydney. The Wellington-Brisbane leg is operated by Virgin Australia while Air NZ operates Wellington-Melbourne and Wellington-Sydney.

Qantas offers a competitively priced one-stop product in the Wellington-Singapore market with journey times of 13 to 15 hours via Australia (some of the Australia-Singapore flights are operated by Emirates). Qantas and Emirates typically are the cheapest option, undercutting Air NZ and SIA.

The SIA service via Canberra is also inferior in terms of product. SIA does not have a lie flat business class seat on the 777 it uses for Wellington-Canberra-Singapore while its lie flat long-haul product is available from Christchurch and Auckland to Singapore. SIA also offers a premium economy product on Auckland-Singapore but the 777 it uses in the Wellington market does not have a premium economy cabin.

Air NZ has premium economy and a lie flat business class product on its Auckland-Singapore flight. Most of the one-stop options via Brisbane, Melbourne and Sydney also offer a lie flat business class seat on the Australia-Singapore leg as well as a premium economy option.

With a better product and nonstop service SIA would be able to attract a much larger share of the Wellington-Singapore market. Wellington therefore should not be discouraged by the initial traffic figures on the new SIA route. Wellington-Canberra is a tiny market while the product Wellington-Singapore is not good enough to attract a majority of Wellington-Singapore passengers and stimulate new demand.

SIA has been able to stimulate significant demand in the Canberra-Singapore market following the launch of the Singapore-Canberra-Wellington route. There would likely be a similar impact if SIA launches Canberra-Wellington nonstop flights. In the first eight months of the route the Canberra-Singapore sector has performed much better than the Canberra, with an average load factor well above 80%, due to strong local traffic between Canberra and Singapore.

The Canberra-Singapore and Wellington-Singapore markets are roughly equal in size, with approximately 45 passengers per day on each city pair prior to the launch of SIA’s service on the Singapore-Canberra-Wellington route. However, SIA has been able to woo more Canberra-Singapore passengers – and stimulate new demand – as it is operating a nonstop product in this market while its Wellington-Singapore product is one-stop.

As Wellington continues to move forward with plans on an extended runway which would enable SIA to operate nonstop from Singapore, there is no reason to be overly pessimistic about the route’s prospects.