Singapore Airport Terminal Services (SATS) is actively exploring joint venture opportunities that will have a strategic fi t with its expansion plans, says SATS chiefoperating offi cer, Karmjit Singh.
He says that SATS, a subsidiary of Singapore Airlines (SIA), remains committed to its overseas expansion strategy and is focusing on high growth markets such as China, India and the MiddleEast to boost long-term profi tability.
“Every now and then, we have been invited by overseas companies to explore possible joint ventures and we are also constantly in discussions with other interested parties,” he adds.
Last year, SATS tied up with Air India in a successful bid for a 15-year cargo handling and seven-year ground handling concessions at the upcoming new Bangalore International Airport at Devanahalli, Bangalore. The airport is scheduled to start operations in April2008.
In June, SATS, together with its joint venture partners Air India and Indian Airlines, secured a seven-year ground handling concession at the new Hyderabad International Airport which isscheduled to open in March 2008.
In China, together with its Chinese partner, Capital Airports Holding Company, SATS is working to fi nalise the details of its expansion in the Mainland, which covers ground handling through its joint venture, Beijing Aviation Ground Services. SATS presently has a presenceat a total of 13 airports in China.
In Hong Kong, SATS has a 49 percent stake in Asia Airfreight Terminal (AAT), which provides a comprehensive range of services from physical cargo handlingto documentation processing.
AAT’s cargo handling capacity was increased by 900,000 tonnes to 1.5m tonnes a year in December 2006, whenits second cargo terminal was completed.
Singh says SATS recorded handling 127,590 tonnes of cargo in June, up 1.1 percent versus the same month last year, after three consecutive months of decline. In the fi rst six months of 2007, air cargo throughput was about 745,670 tonnes, down 0.9 percentage point compared with the same period last year, refl ecting the weakness in theairfreight market this year.
Asked about pressure on rates, Singh notes that this is always present in the face of keen competition. “SATS will, therefore, continue to focus on productivity gains and service quality improvementsto bring the best value service offerings to its clients, apart from sustaining its competitive cost structure.” Regarding SATS actual rates, Singh says: “For competitive reasons, we are unable to disclose our current or historical rates and make comparisons.” Asked about a rumour of layoffs, he says SATS did not implement staff reduction last year to stay competitive. “We had a major workforce restructuring back in 2004 and that resulted in S$20 million cost savings annually.” SATS, he says, will continue to focus on productivity gains and service quality improvementsto enhance cost competitiveness.
“In FY2006/07, our productivity saw an improvement with Value Added per Employee rising 4.2 percent to S$90,477,” he says.
Asked what proportion of SATS revenue contributions were from overseas, Singh says in the last fi nancial year, SATS’ overseas associates contributed approximately 23 percent to group profi t before tax. – Wong Joon San