Market Equilibrium: Recent changes in the markets for some goods & services in Singapore

1) Premium seats hit

Asian airlines worst hit as demand for top cabins falls 23.4% (ST March 18, 2009)

by Karamjit Kaur, Aviation Correspondent

AIRLINES are finding it tough to fill first and business class cabins as the global economic downturn continues to hit demand.

Travellers downgrading or just not flying led to so-called premium traffic sliding 16.7 per cent industry-wide in January, compared with the same month last year.

It was the worst showing in more than 20 months, and Asian carriers like Singapore Airlines (SIA) and Cathay Pacific are bearing the brunt of the slump.

The weakest premium travel markets are those associated with this region, according to new data from the International Air Transport Association (Iata), which represents about 230 carriers.

Within Asia, premium traffic fell by a higher-than-average 23.4 per cent. Trans-Pacific premium traffic took a 24.7 per cent hit.

Falling fares and fuel surcharges are also alarming carriers like SIA, which earn almost half of their revenues from top-tier travellers.

A recent American Express survey found business class fares out of Singapore fell 3 per cent in the last three months of last year, compared with the July-September period.

Iata estimates that revenues from premium passengers industry-wide were down at least 25 per cent in January.

The overall drop of 16.7 per cent in the premium segment compares with a 5.9 per cent decline for air traffic across the board.

Iata said: 'What started as a financial crisis in the Western economies has now become a manufacturing crisis, hitting the export-dependent economies of Asia hardest.'

To survive what has been described as the worst crisis in decades, airlines are taking tough measures, including slashing capacity, parking planes and cutting jobs.

SIA, for one, plans to cut 11 per cent of its total capacity in the next 12 months. But with demand falling at a much faster pace, industry experts have warned of tougher times ahead.

Last month, SIA carried 1.18 million passengers, 20.2 per cent down from the same month a year earlier.

The steep fall came despite a 8.5 per cent cut in capacity.

Across its network, the airline filled just 69.7 per cent of available passenger seats, down 7.1 percentage points from a year earlier.

Cargo volumes also slipped, down by 16.9 per cent to just below 80 million kg, with SIA filling 56.7 per cent of available freight space.

This was down 5.5 percentage points from last year.

SIA, which unveiled its performance data yesterday, said: 'The prevailing global economic crisis has significantly dampened travel demand, translating to weaker uplifts.'

This was in contrast to the performance in February last year, which was supported by the Chinese New Year holiday peak, the Changi Airshow and the additional day in the leap year.

The airline said it will continue to monitor traffic movements and make the adjustments to its route network where necessary to match capacity to demand.

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2) Public transport cheaper now
(ST April 1, 2009)

SBS Transit operations staff member Tan Kian Guan (left) and Land Transport Authority fare system engineer Ng Wee Hong checking on the systems software in SBS Transit buses to prepare for the new fares. -- ST PHOTO: MUGILAN RAJASEGERAN

COMMUTERS will save more on public transport from today, as lower fares kicked in this morning.

They will now pay two cents less on each bus or train trip. And due to a more generous transfer rebate, those who make transfers will save more, starting at 14 cents for a journey with one transfer.

To prepare for the new fares, thousands of buses and hundreds of MRT fare gates went through a final round of checks last night.

Tests were also carried out overnight at MRT computer control rooms to verify that the new fares were in place. The final round of checks follows weeks of testing of the fare systems to ensure that there are no glitches today.
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3) Monitoring use of fuel
(ST, 1 April 2009)

Motorists are more conscious about fuel consumption these days. -- ST PHOTO: SHAHRIYA YAHAYA

MOTORISTS are more conscious about fuel consumption these days than two years ago - and more aware of how to squeeze more mileage from every litre.

This finding came from a survey by oil company Shell, which polled 300 motorists here in January and the same number in each of five other economies - the Netherlands, Germany, Hong Kong, the Philippines and Malaysia.

Three quarters of all respondents said they were more conscious about using fuel efficiently in the last 12 months than in 2007, when only a quarter said so.

The survey was not done last year.

Among Singapore motorists, 77 per cent said they were taking note of the number of kilometres their cars were getting out of each litre of fuel.

Two years ago, only 59 per cent did so.

The 77-per-cent figure made Singapore motorists the most aware of fuel efficiency among the drivers polled. Dutch motorists were next with 75 per cent.

Shell's Fuels Technology Manager in the Asia Pacific Eric Holthusen said he had no doubt the economy and higher fuel prices last year played a big part in motorists wanting to save on fuel.

Motorists here who were polled were also asked what they did to save fuel.

On average, they could name eight fuel-saving tactics this year, up from just 2.5 when the poll was last done in 2007.

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4) Singaporeans rise to bait of good travel deals

Fri, Mar 27, 2009 The Straits Times

People visiting the travel fairs at Suntec City on Mar 22, 2009

By Lim Wei Chean

TRAVEL agents are still milking the travel market in Singapore by holding even more travel fairs.

This is despite the recent successful run of fairs, including the granddaddy of them all for the first half of the year, namely the National Association of Travel Agents Singapore (Natas) event.

Last Sunday, ASA Holidays booked a hall at Suntec Singapore Convention and Exhibition Centre for a travel fair.
Three of its rivals - CTC Holidays, Dynasty Travel and Singxpress - followed suit with booths at the Suntec City Mall. Their targeted customers: Those who have yet to book holidays.

Travel agents said competition for the consumer dollar has become stiffer, with the recession biting. So, they are willing to stage travel fairs even after the Natas one.

The Straits Times understands that the cost of staging a one-day fair in Suntec starts at $500,000. Smaller events like the one by CTC Holidays cost $100,000.

CTC Holidays spokesman Alicia Seah explained: "We cannot sit still and do nothing. Our competitors are here, so it's convenient to be here, too, to catch the crowds."

So, are Singaporeans still rising to the bait of good travel deals? It seems they are - as long as the deals are good.

Mr William Goh, 49, who owns his own sub-contracting business, bought himself and his wife an eight-day trip to Japan and Shanghai for $2,400.

He said: "Now that the economy is no good, I think the offers should be good."

Mr Goh has had little time to travel in the past. But with the construction business scene quieter, he can now do so.

Banking analyst Dennis Tan, 30, who missed the recent travel fairs, was out yesterday, sniffing out the best deal for a mid-year European tour with his wife.

He said: "We still need to travel because Singapore is so small. It's not like in the United States, where you can travel from one state to the next for a holiday."

The response to last Sunday's fairs was not as overwhelming as before and during the Natas event. Still, ASA spokesman Louisa Ng said she was "moderately satisfied" with the bookings the company secured. Most were for short-haul trips to China and elsewhere in Asia.

CTC Holidays, which hoped to make about $4 million in the two-day fair, conceded that reaching this goal would be tough. The other travel agents declined to reveal sales targets or figures.

With the news that the economy may take longer than expected to turn around, Dynasty Travel general manager Juliana Gan is worried it will hit travellers' spending power in the latter half of the year.

For now, travel agents are keeping their sights firmly on the competition - how they are pricing their packages and when they are staging events.
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5) HDB resale flat prices fall

Thu, Apr 2, 2009 The Straits Times

First-quarter dip is first since 2006 and points to end of record run

PRICES of HDB resale flats fell in the first quarter of this year - the first decline since 2006 and a sign that the two-year run of record-breaking gains has ended.

Flash estimates yesterday showed that prices dropped by 0.6 per cent for the first three months, compared with the fourth quarter of last year.

Prices in the fourth quarter had increased by 1.4 per cent over the previous period and helped drive resale flat prices up by a hefty 31.2 per cent over the past two years.

The latest numbers caught industry experts by surprise and underline how the worsening recession has hit the Housing Board (HDB) market sooner than expected.

Many analysts had predicted further increases in resale prices with a decline becoming apparent only later in the year.

Agency chiefs from both PropNex and ERA Asia Pacific had recently forecast that HDB resale prices could rise by a further 3 per cent to 5 per cent this year.

But yesterday's numbers have altered expectations overnight, with analysts now predicting a decline of anything from 2 per cent to 10 per cent this year.

Tell-tale signs in the market signalled that prices have started heading southwards, in tandem with private property prices, which plunged 13.8 per cent for the first quarter of this year, said Prop- Nex chief executive Mohamed Ismail.

'The gloomy outlook for the past few months, coupled with more retrenchments, have hit home, and even the HDB market is feeling it,' said Mr Ismail.

PropNex and ERA have reported buyer resistance to flats above $500,000, with five-room and executive flats feeling the brunt of the price slide.

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6) Private Property Market

Private home prices take double-digit dive (ST, 2 April 2009)

(SINGAPORE) Private home prices plunged 13.8 per cent in the first three months of this year - a record quarterly drop as developers and other market players slashed their expectations.

It was the third quarterly fall in prices - and much steeper than the 6.1 per cent drop in the preceding Q4 2008, according to advance estimates released by the Urban Redevelopment Authority (URA) yesterday. Private home prices dipped 1.8 per cent in Q3 2008 after 17 straight quarters of growth.

Analysts were expecting a significant drop in private home prices, but the actual fall was bigger than thought. In recent months, developers have cut the selling prices of new homes and sellers of secondary properties have also trimmed their asking prices.

'The fall is not surprising as a lot of developers have reduced prices to move new units, and in the resale market, people are now asking for more reasonable prices,' said DTZ's senior director Chua Chor Hoon.

DMG & Partners Securities' analyst Brandon Lee said that new projects and units in previously launched but unsold projects, were being launched or relaunched at 10-30 per cent discounts to the original intended selling prices. Also, there were distressed sales in the secondary market. (read more)

Related: Channel U's Moneyweek Programme 财经追击 - in Mandarin - on July 2008