SIA, Scoot raise airfares but say full cost of fuel increases will not be passed on to passengers

SINGAPORE: Singapore Airlines (SIA) said it will not raise ticket prices to a level that fully passes soaring fuel costs on to passengers, even as jet fuel prices have more than doubled since the start of the Iran conflict.

Speaking to the press on Friday (15 May), SIA chief commercial officer Lee Lik Hsin said airfare pricing ultimately depends on balancing demand and supply, noting that the airline must remain competitive to continue attracting travellers.

“We want to still be able to attract passengers, and in doing so, we have to be competitive and offer value. We have to factor that in very carefully as we price tickets,” he told reporters.

In its financial results filing for the year ended 31 March, the SIA group said both SIA and Scoot had already raised fares across their network. However, it acknowledged that the increases do not fully make up for the sharp rise in jet fuel prices, which it described as the group’s single largest expenditure item.

Mr Lee explained that the airline deliberately avoided increasing fares to a point where they would fully cover higher fuel costs, warning that doing so would drive passengers away and hurt demand.

“That is why airfares have not been increased to a point where they fully cover the fuel price hikes, because otherwise we will have no passengers,” he said, adding that travellers would not accept the full pass-through of fuel price increases.

Despite mounting fuel costs and operational challenges stemming from tensions in the Middle East, SIA is pressing ahead with expansion plans in Europe while several other carriers scale back services.

The airline group is increasing capacity to Europe by 13% and has been seeking to capture demand from passengers affected by disruptions to Middle East transit routes.

SIA chief executive Goh Choon Phong said the airline had moved quickly to take advantage of displaced traffic flows by introducing additional flights where resources allowed.

“Commercially, even right from the start, we were already looking at how we can better capture some of the displaced traffic through some of the ad hoc additional flights that we can put in within the capability of our resources,” he said.

Among the measures taken were ad hoc flights to London and Frankfurt after some other airlines suspended Asia-Europe services.

The carrier is also preparing to launch flights to Madrid and a three-times-weekly service to Munich in October. Capacity to Britain will also increase as SIA expands its London Gatwick operations. Combined with flights to London Heathrow, the airline will operate up to six daily services to the British capital.

Mr Lee said the group’s strong financial position has allowed it to continue growing rather than reducing flights despite the difficult operating environment.

“Our financial position is strong, and therefore we are actually growing rather than cutting capacity,” he said.

Chief operations officer Tan Kai Ping added that while some Middle Eastern carriers have resumed services, SIA remains confident it can continue attracting passengers seeking alternative transit options outside the region.

“There are still the customers who change their plans and want to travel through alternate hubs,” he said.

Addressing concerns over fuel availability, Mr Tan said jet fuel supplies remain stable throughout SIA’s network despite ongoing geopolitical volatility.

He noted that airports facing fuel shortages would typically begin rationing supplies, but said that such a situation has not occurred at any airport served by SIA.