Singapore Airlines’ (SIA) regional carrier SilkAir will suspend its twice-weekly service to Solo in Central Java, Indonesia from October 26.
According to the airline, this decision is part of an ongoing review of its network and capacity.
Per a report by CAPA, the SIA group has never suffered an annual loss in its 42-year history. However, profits have dropped over the last several years, with the group earning an overall profit of just S$39 million (US$31 million) this quarter – a staggering 52.4 per cent drop over the same period last year.
As detailed in SIA’s latest financial performance review, SilkAir’s operating profit was only S$2 million (US$1.5 million) in Q1 2014, which represents a decline of S$12 million (US$9.5 million) from Q1 2013.
SilkAir has attributed this decrease in profits to lower revenue stemming from weaker yields, along with higher operating expenses from capacity injection.
The growing competition from low-cost carriers (LCC's) is also undoubtedly a factor, as about 60 per cent of the regional carrier’s network is now dominated by LCCs, thereby placing significant pressure on yields. Solo itself is well served by a number of airlines, with LCCs such as AirAsia and Lion Air offering highly aggressive fares to the city.
Despite the service suspension, SilkAir will still fly to two other points in Central Java – Semarang and Yogyakarta.
Customers who have already purchased tickets for travel to Solo after 25 October will either be given a full refund or the choice of flying with SilkAir between Singapore and any other Indonesian point at no extra cost. Administrative fees have been waived and this also applies to KrisFlyer redemption tickets.
For more information, visit silkair.com