Are collaborations, partnerships the way forward for SIA?

Its recent Air China deal may dilute branding.

As competition intensifies from expanding Gulf carriers, forging collaborative initiatives may be one of SIA’s focus moving forward, according to a report by OCBC.

Recently, SIA and Tourism Malaysia inked a two-year partnership to boost tourist flow into Malaysia. The agreement will have a focus on 14 major inbound markets that include UK, Russia, US, India, and China by leveraging on SIA and SilkAir’s existing network.

Further, just yesterday, SIA and SilkAir sealed the deal on a codeshare agreement with Air China mainly on routes between Singapore, Beijing, and Chengdu.

OCBC notes that given SIA’s position in the market, the codeshare deal may potentially dilute SIA’s parent airline branding and image on its Beijing flights. However, OCBC does not rule out the possibility of the agreement opening up further opportunities between the two airlines.

“All said, we still expect the cheap jet fuel to drive its earnings recovery in FY17, as the expensive hedges unwind progressively ahead,” states the report.