SilkAir

Background

A wholly owned subsidiary of Singapore Airlines (SIA), SilkAir served as SIA’s regional wing.¹ The airline operated short and medium haul routes to about 52 destinations in Asia.² It ceased operations and merged into SIA in 2021.³

Background
SilkAir’s origins lie in the formation of Tradewinds, a subsidiary of SIA established in 1975. Tradewinds functioned as a hotelier before becoming a travel agency providing charter flights.⁴ Tradewinds started airline operations on 21 February 1989 with a flight to Pattaya on a McDonnell Douglas MD-87 leased from GRA Group in Ireland.⁵ The airline expanded its operations thereafter, running 39 scheduled weekly flights to destinations such as Haadyai, Phuket, Bandar Seri Begawan and Kuantan by August 1990.⁶

In April 1992, Tradewinds was renamed SilkAir in an effort to turn it into a premier regional carrier. The rebranding exercise, which saw the adoption of a new logo created by American airline corporate identity specialist Landor Associates, came with a US$100 million buying spree to increase the fleet to 12 by 1997. The airline also launched a new executive class, introduced new routes to Vientiane and Cebu, and added new destinations in China and Indonesia.⁷

The first decade (1992–2003)
The airline’s first year under the SilkAir brand name saw a 68 percent increase in passenger traffic from 291,304 to 489,476 passengers.⁸ However, in 1994 the carrier registered a loss of S$27 million. To reduce depreciation and operating costs, it phased out its Airbus A310 aircraft and replaced them with Boeing 737 and Fokker 70. The airline also dropped unprofitable routes and launched new ones.⁹ Despite being unprofitable, SilkAir increased its seating capacity at an annual rate of about 30 percent from 1990 to 1997.¹⁰

In 1997, SilkAir returned to financial viability and reported a net profit of S$100,000.¹⁰ To expand its fleet, it purchased eight Airbus aircraft to replace its fleet of Boeing 737.¹² The Asian economic crisis in 1998, however, affected its expansion plans, forcing it to focus on renewing rather than expanding its fleet. As a result, the carrier delayed the delivery of the new Airbus aircraft, to five by 1998, and the rest by 2001. The airline also registered lower yields from fares, and its Indonesian operations, which made up around 30 percent of its network and ticket sales, were adversely affected by the economic crisis.¹³

With global air travel declining due to numerous factors – including the severe acute respiratory syndrome (SARS) outbreak in 2002 and a global economic slowdown – SilkAir enforced cost-cutting measures, such as suspending less profitable services and laid off some expatriate pilots.¹⁴ In January 2002, SilkAir pilots agreed to wage cuts of up to 16.5 percent.¹⁵

In June 2002, the regional airline announced a five-year plan with the goal of becoming a market leader. The plan entailed expanding its fleet to 15, doubling its tourism and market development investment from S$8 million to S$16 million, and boosting its charter business to generate extra revenue. It also planned more flights to key tourist destinations in China and India.¹⁶ By October 2002, SilkAir announced the purchase of four Airbus 320 and two Airbus 319, which took its fleet count to 15.¹⁷ It also introduced new routes to Hyderabad in India, as well as Chengdu in China.¹⁸

Competition from budget airlines and continued growth
In the face of increasing competition from budget airlines like AirAsia and ValuAir, SIA publicly contemplated converting SilkAir into a budget carrier in 2003, but eventually decided against it.¹⁹ Instead, it started a budget carrier named Tiger Airways.²⁰

In response to the competition, SilkAir launched a S$3 million branding campaign in February 2003 to raise customers’ awareness of the carrier’s services and deals.²¹ It also revamped its online booking service and reduced operating costs with a target of S$10 million in annual savings.²²

In 2004, the carrier refreshed its cabin and cabin crew’s uniform to project a more casual image. Designed by SilkAir crew member Vianha Rohim, the uniform was selected through a design contest. It was the third outfit change since the carrier started airline operations in 1989. The first, unveiled in 1989, was designed by local designer Celia Loe, while the second was by Parisian fashion house Balenciaga in 1993.²³ In 2015, SilkAir refreshed its cabin crew’s uniform with an outfit designed by Singaporean fashion designer Alexandria Chen. It is a one-piece uniform with an asymmetric neckline and seagull-patterned georgette bow pin. The uniform comes in two colours: aqua blue for junior cabin crew and plum red for senior flight attendants.²⁴

Following the introduction of these measures, SilkAir’s profit doubled to S$30.6 million in the financial year 2004 from the previous year. It also surpassed the one million passenger milestone in 2005.²⁵ The strong showings continued, with record quarterly and monthly passenger traffic levels in 2005.²⁶ In 2006, the airline carried 1.56 million passengers, a 25 percent increase from the previous year. In that financial year, it attained a turnover of S$415 million and a profit of S$30 million.²⁷ The improved performance came under the stewardship of Mike Barclay, who was the company’s chief executive officer from 2004 to 2007.²⁸

SilkAir received several awards in 2004, including Best Regional Airline (Asia and China) from magazines TTG Asia and TTG China.²⁹

In December 2006, SilkAir signed a S$2 billion deal to acquire 11 Airbus planes, with an option for nine more. It was the company’s first aircraft order in 10 years.³⁰

The airline transitioned to an all-Boeing fleet in 2014 with the arrival of the first Boeing 737-800.³¹

Merger with SIA
In 2018, SIA announced that SilkAir would upgrade its cabins ahead of its eventual merger into SIA and transfer several routes to Scoot.³² SilkAir ceased its operations after 29 years and completed its merger into SIA in September 2021.³³

Author
Alvin Chua

References
1. “SIA Increases stake in SilkAir,” Business Times, 26 February 1994, 7; Nisha Ramchandrani, “Keeping it a Great Way to Fly,” Business Times, 5 December 2015, 8-9. (From NewspaperSG)
2. Singapore Airlines, Annual Report FY2021/22 (Singapore: Singapore Airlines, 2022), 24.
3. Singapore Airlines, Annual Report FY2021/22, 3.
4. Gerry de Silva, “Tradewinds to be Renamed SilkAir, Plans to Buy More planes,” Straits Times, 13 March 1992, 48; “Tradewinds Takes Off Next Month,” Straits Times, 23 January 1989, 18; Edmund Loh, “Tradewinds Negotiating to Buy Medium-haul Plane,” Straits Times, 25 May 1988, 25. (From NewspaperSG)
5. “Tradewinds Takes Off on Inaugural Flight,” Straits Times, 22 February 1989, 12; Lee Han Shih, “Tradewinds Spreads its Wings on Back of Tax Perk,” Business Times, 17 January 1989, 3. (From NewspaperSG)
6. Rahita Elias, “More SEA Destinations for Tradewinds,” Business Times, 28 August 1990, 27. (From NewspaperSG)
7. de Silva, “Tradewinds to be Renamed SilkAir, Plans to Buy More Planes”.
8. Felix Soh, “SilkAir Soars with New Name,” Straits Times, 10 May 1993, 21. (From NewspaperSG)
9. Alec Almazan, “SilkAir to Phase Out A310s, Revamp Routes to End Losses,” Business Times, 11 September 1995, 46. (From NewspaperSG)
10. Conrad Raj, “SilkAir in Market for US$400m Worth of Planes,” Business Times, 31 March 1997, 1. (From NewspaperSG)
11. Conrad Raj, “SIA Should List Some of its Subsidiaries Soon,” Business Times, 26 June 1997, 19. (From NewspaperSG)
12. Raj, “SilkAir in Market for US$400m Worth of Planes”; Jean Chia, “Aircraft Sales Keep SIA Hanging Onto $1b Net Profit,” Straits Times, 17 May 1997, 48; “SilkAir Inks Airbus Deal,” Straits Times, 1 November 1997, 76. (From NewspaperSG)
13. “SilkAir, Hit by Regional Crises, Defers Expansion,” Business Times, 25 September 1998, 40. (From NewspaperSG)
14. Nicholas Fang, “SIA Lines Up Action Jan to Battle ‘Worst Crisis’,” Straits Times, 30 April 2003, 4. (From NewspaperSG)
15. Karamjit Kaur, “SilkAir Pilots Strike Salary Deal,” Straits Times, 29 January 2004, 7. (From NewspaperSG)
16. Nicholas Fang, “Silk Air Aims to be Market Leader,” Straits Times, 17 June 2002, 18. (From NewspaperSG)
17. “SilkAir to Buy Six Airbus Jets for S$587m,” Straits Times, 5 October 2002, 30. (From NewspaperSG)
18. “SilkAir to Lauch Flights to Hyderabad,” Business Times, 18 October 2002, 38. (From NewspaperSG)
19. Ven Sreenivasan,” SIA Clears the Air: SilkAir Won’t Be Budget Carrier,” Business Times, 30 October 2003, 1. (From NewspaperSG)
20. Kelvin Wong, “SIA to Start Budget Carrier,” Straits Times, 10 December 2003, 1. (From NewspaperSG)
21. Nicholas Fang, “SilkAir Forks Out $3m for Branding Campaign,” Straits Times, 19 February 2003, 19. (From NewspaperSG)
22. Chan Chao Peh, “SilkAir Remains Full-Service,” Today, 6 July 2004, 11; Yap Su-Yin, “Record 1m Passengers Flew Silk Air,” Straits Times, 13 April 2005, 4. (From NewspaperSG)
23. Glenys Sim, “New Outfit for SilkAir Staff from Next Month,” Straits Times, 21 July 2004, 9. (From NewspaperSG)
24. “New Look for SilkAir Cabin Crew from April 15,” Business Times, 11 April 2015, 14. (From NewspaperSG)
25. Yap Su-Yin, “Record 1m Passengers Flew Silk Air”; Christie Loh, “4-year High for SIA,” Today, 12 May 2005, 28. (From NewspaperSG)
26. Ven Sreenivasan, “Silkair Flew 110,000 Passengers in Dec,” Business Times, 13 January 2005, 5. (From NewspaperSG)
27. Karamjit Kaur, “SilkAir Gets Ready to Tap Growth with $2b Airbus Deal,” Straits Times, 21 December 2006, 4; Karamjit Kaur, “SilkAir Passenger Numbers Up 25%,” Straits Times, 16 March 2007, 47. (From NewspaperSG)
28. Kaur, “SilkAir Gets Ready to Tap Growth with $2b Airbus Deal.”
29. “SilkAir, Air NZ Top,” Streats, 14 October 2004, 12. (From NewspaperSG)
30. Kaur, “SilkAir Gets Ready to Tap Growth with $2b Airbus Deal.”
31. “SilkAir starts move to all-Boeing fleet,” Business Times, 5 February 2014, 9. (From NewspaperSG)
32. Karamjit Kaur, “SilkAir to Give Up Some Routes to Scoot Ahead of Merger With SIA; Scoot to Suspend Flights to Honolulu,” Straits Times, 22 November 2018. (From Newslink)
33. Singapore Airlines, Annual Report FY2021/22, 3.



The information in this article is valid as of October 2023 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.