SINGAPORE (AFP) - With three new budget airlines, plans for a low-cost airport terminal and the sacking of hundreds of workers, nothing, it seems, is being spared in Singapore's efforts to remain a force in the region's increasingly competitive aviation industry.
Aviation analysts said the laying-off of nearly 400 people and the outsourcing of another 1,000 jobs last week by government-controlled Singapore Airlines and one of its subsidiaries reflected the sharp edge of the comprehensive restructure underway.
But with low-cost airlines igniting competition across Asia and soaring fuel prices hitting bottom lines, analysts said Singapore's approach was necessary and typical of its determination to maintain its status as an aviation top-dog.
"Singapore has always been at the head of liberalisation. They have always championed this sort of thing," Ian Thomas, a senior consultant with the Centre for Asia Pacific Aviation, told AFP.
"That pace has been taken to a new level now."
Chris Sanda, a Singapore-based aviation analyst with DBS Vickers Securities, echoed Thomas's sentiments over the city-state's ambitions as it grapples with the budget airline phenomenon.
"They want to be the leader. It's part of the whole Singapore thing. Better, faster, first out of the box," Sanda said.
Although Malaysia's AirAsia is Southeast Asia's no-frills leader after being the first to begin flying in 2001, the Singapore government and an array of mostly government-linked ventures have reacted quickly and aggressively.
Valuair, set up by former Singapore Airlines deputy chairman Lim Chin Beng, began operations in May and flies to Hong Kong, Bangkok and Jakarta. It is planning to expand to Perth starting December, followed by routes into China.
In one of the boldest moves, Tiger Airways started a price war when it launched its services this month with tickets to Bangkok for just one Singapore dollar (59 US cents).
Singapore Airlines and the government's investment vehicle, Temasek Holdings, have a combined majority stake in Tiger Airways.
Temasek also has its thumb in the third low-cost airline pie that will come out of Singapore, an as-yet unnamed venture with Australian carrier Qantas that is expected to begin flying within months.
To cater for the low-cost airlines, the government announced in July that Asia's first dedicated low-cost airline terminal would be built at Changi Airport and operational by early 2006.
Authorities have said costs for airlines and passengers will be about 20 percent lower than at Changi's major terminals.
Thomas said there was a lot of other restructuring taking place in Singapore's aviation industry that was also important in its competitive drive.
"It doesn't stop at the airlines or the airports. It goes to all sectors in the aviation industry, mainly in the supply areas," he said, listing ground and cargo handling, reservation systems and fuel delivery as other key sectors.
Ground handler and in-flight caterer Singapore Airline Terminal Services (SATS) showed last week it was prepared to adopt hard-line tactics to remain competitive when it sacked 108 people.
SATS, which is 85 percent owned by Singapore Airlines, said another 1,064 permanent jobs would be outsourced, giving those employees the option of shifting to contract work or also joining the unemployment queue.
Singapore Airlines also announced last week it would outsource 200 jobs in its own finance and IT divisions this year, with the carrier unable to guarantee work for all the laid-off staff with the new service providers.
"There's an evolution to lower costs and for higher efficiency and when you have all those changes you are going to have friction and job losses and job shifts," DBS Vickers' Sanda said.
Thomas said the changes come from a fundamental change in thinking by the government after decades of ensuring Singapore Airlines was protected, and the city-state's reforms point to similar policy shifts across Asia.
"Singapore has been particularly aggressive in stating its position. They have said quite clearly from the outset that national carrier interests are no longer paramount," he said.
Thomas and Sanda agreed that the flow-on economic impacts of travellers coming to Singapore were now much more highly regarded by the Singapore government than simply the revenue from a passenger fare.