Empty biz class costs Singapore Air top rank

Singapore Airlines Ltd’s biggest drop in passengers in more than five years cost the carrier its ranking as the world’s most valuable airline. Tan Teng Boo is enjoying the empty seats.

“Before the slowdown, it was always difficult to get a seat,” said Tan, who oversees $200 million as managing director at Kuala Lumpur-based iCapital Global and flies at least three times a month.

For Singapore Air, which gets about 40 per cent of revenue from premium travel, failure to fill seats at the front of the cabin means more capacity must be cut and jobs slashed to avert a loss, analysts said. Chief Executive Officer Chew Choon Seng plans to remove 17 per cent of the airline’s fleet amid a global recession and sinking travel demand that’s already pushed British Airways Plc and Cathay Pacific Airways Ltd into losses.

“With the current economic conditions, people will fly less or try to save by downgrading because premium class is so much more expensive,” said Teng Ngiek Lian, who manages $2.6 billion as chief executive officer of Target Asset Management in Singapore. “It’s going to be tough on the airlines.”

All Nippon Airways Co eclipsed Singapore Air as the most valuable airline this month. Premium travel in January dropped more in Asia than in any other region, slumping 23 per cent within the region and 25 per cent on routes across the Pacific, said the International Air Transport Association, or IATA.