Aviation thinktank gives thumbs up to Canberra Express

An international aviation thinktank has given the thumbs up to the Canberra Express linking Singapore and Wellington with the Australian capital for the first time.

In a detailed analysis of the four-times-weekly flights that starts in late September, CAPA, the Centre for Aviation, says it’s “bold step” that will probably pay off for the “traditionally conservative” Singapore Airlines (SIA).

The study says this is the first new international route for SIA outside Asia since 2011, though Dusseldorf in Germany is coming up in July this year.   

In doing so, SIA has out-manoeuvred both Qantas and Air New Zealand by providing Canberra Airport with its long-desired international status and giving Wellington its first Asian airline.

The Canberra Express will be codeshared with Virgin Australia, in which SIA and Air New Zealand are major shareholders, while Air New Zealand is said to be a “reluctant” codeshare partner. (This has been announced by SIA but not yet by Air New Zealand.)

Switching from Sydney
CAPA’s analysis makes a number of telling points, including the potentially large catchment of New South Wales’ population who will switch from Sydney for international flights.

Unlike Sydney, Canberra has no curfew, so the flights have been timed to leave around midnight for an early morning arrival in Singapore. The last flights to Singapore from Sydney leave at 7pm and arrive at midnight.

The choice of the larger Boeing 777-200s rather than Airbus A330s also provides a larger cabin for business class passengers, though the seats are not completely lie-flat and there is no premium economy seating.

Canberra and Wellington are expected to generate a larger proportion of high-paying customers, while leisure travel will be boosted by the large Asian student populations in both capitals.

Air traffic flows are also in contrast to other airports – Wellington and Canberra are busier during sessions of Parliament, are more dependent on business travellers and do not have the holiday peaks associated with leisure travel. January, for example, is their weakest month.

Financial incentives
CAPA notes that both airports are providing financial incentives to SIA – the equivalent of $9 a passenger in the case of Wellington (from the shareholding council rather than the airport company) while Canberra has spent $A32 million to provide international facilities.

In return, CAPA says, the link “will boost the Wellington area economy and facilitate efforts to boost tourism.”

The move cements SIA’s position as the second largest foreign airline in both Australia and New Zealand after Emirates (102,00 weekly seats versus 120,000).

The Canberra Express will add another 4200 a week to the SIA group total, which also includes its Asia region SilkAir and low-cost Scoot operations that fly to Australia.

Canberra and Wellington also bring the total SIA group destinations to nine in Australia and three in New Zealand. The existing Australian destinations are all mainland state capitals including Darwin but not Hobart, as well as Gold Coast and Cairns.

Total SIA group capacity to this region has increased faster than the airline’s overall growth. By the end of September, when the Canberra Express launches, SIA will operate 122 weekly flights.

These include a decoupling of the SilkAir’s highly successful Singapore-Darwin-Cairns service, which will give Cairns a three weekly direct service from Singapore in late May and Darwin a five weekly non-stop service. 

No benefits to Air New Zealand
SIA has a close relationship with Air New Zealand but CAPA says codesharing the Canberra Express does not make a compelling business case.

Since Air New Zealand agreed to resume its Singapore flights in January 2015 in an alliance with SIA, the total number of seats has increased to 15,000 compared with 11,000 in 2013 when SIA was the only operator.

Travellers from Wellington to Singapore can already fly via Auckland on Air New Zealand or SIA for the comparable journey time via Canberra in better aircraft (A380 or B777-300ER) with fully lie-flat seats in business as well as premium economy, which is not offered on the Canberra Express.

Air New Zealand has a revenue-sharing alliance with SIA on this route and will, therefore, lose revenue from Wellington-based travellers not choosing the Auckland option.

Air New Zealand also stands to lose out on its transtasman traffic to Canberra via Brisbane, Sydney and Melbourne in its codeshare with Virgin Australia.

However, CAPA says, Air New Zealand is likely to agree to codesharing the Canberra Express by the time the service starts on September 20 because it puts higher value on the SIA relationship.