Good afternoon, comrades and friends
Recent Restructuring in SATS
The past few months have not been easy for your union and members. The SARS outbreak in April 2003 brought a sudden shock to the travel and its related industries.
In May 2003, a month later after the SARS virus hit us, the volume of business in SATS took a nose dive. The unit services handled dropped by 35%% when compared to the same time last year. The number of flights handled dropped by 37%. The number of passengers handled dropped by 56%. The company was badly hit by the impact of SARS. The parent company, Singapore Airlines was bleeding at the rate of $5 m to $6 million daily. Tough and painful measures including wage cuts and retrenchment had to be undertaken.
It was not a pleasant experience for all of you. I must commend all of you and especially your union leaders for the courage you have shown to do what was unpleasant but necessary for the long-term survival of jobs in the company. The leaders have managed the process well.
The competitors of SIA and its group of companies were all watching the restructuring exercise closely, especially at the resolve of the union to do the right, but painful thing to survive. Other investors were also looking at our unions' ability to face the facts squarely and do what was necessary. Just as in the case of PSA Corporation, we have shown to the competitors of PSA that we are prepared to face the challenge. We would not give up what we have painfully built up in the past 30 years, without putting up a fierce fight. If any competitors were thinking of stealing a piece of the pie from us, they must be prepared for us to sink our teeth deeply into the challenge and fight back.
The union has proved itself to be a responsible and responsive one. Communication is vital in any organization. The management must strengthen its communication with the workers and the unions. Trust is also a very important element in weathering any crisis. Trust needs time and sincerity to build. The management and unions must make the effort to strengthen the communication channels and build up the trust in each other.
Challenge Assumptions and Prepare for Change
Can we assume that once we have dealt with the effects of SARS, the business will recover and all will be well again? Yes and no. Yes, the SARS outbreak caused a serious dent on the demand of air travel. However, it will be temporary. People will still need to travel, or want to travel. Thus the need for greater connectivity around the world will increase. Even before SARS hit us, the driving forces in the air travel industry were already shifting. While the travel business will grow, there will be keener competition.
Globalisation means that the ground crew of SATS in Singapore is not only competing with their counterparts in CIAS, but the workers of airport terminal services around the world. The problem is that many people do not want like to face changes. This is human nature. Change is stressful. It means having to move out of one's comfort zone. What happens is that many people choose to ignore the changes or choose to deal with them only the changes hit them hard. Unfortunately, when the changes hit them, it is often too late and the damage would already have been done!
Changes have always been around us. What is different now is that the tide of global competition has caused the changes to happen even faster. What should we do? We need to constantly challenge our old assumptions. We need to stay ahead of the changing environment and get ourselves ready.
Let me give you a quick example. We all know the Beatles. When the band approached Decca Recording Company for a recording contract in 1962, this is what the Company said: "We don't like their sound, and guitar music is on the way out." On hindsight, we know that this was perhaps the biggest mistake they made. By the end of 1962, Beatle-mania had erupted in the UK. In 1964, just two years later, the Beatles achieved the unprecedented - occupying all five of the top positions on Billboard's Top Pop Singles chart. We are constantly caught in our old mindset of how the world should be, we would miss opportunities. Worst still, we could be rendered irrelevant.
Status as an International Air Travel Hub
We have to constantly scan the operating environment of our area of work. We have prided ourselves to be a premier air travel hub for many years. The International Air Transport Association (IATA) released results of a survey earlier this year. 70,000 passengers at 51 major airports worldwide were interviewed. Singapore maintained our lead in terms of the ease in making connections with other flights. We maintained top position for courtesy and helpfulness of airport staff for two years. You have played an important role in the achievement. The hard work of you and your fellow workers had paid off. Well done.
What was also significant in the survey was this. Dubai International Airport topped the overall rankings. Let me quote from the report. "Dubai is perceived to be the 'best in class' airport out of the 51 reported by both business and leisure passengers for overall passenger satisfaction, closely followed by Singapore." The Hong Kong airport was ranked after Singapore, followed by Copenhagen and Kuala Lumpur International Airport.
What does it mean? It means that when we achieve "Number One" status, we may not remain at the top forever after.
On May Day 1997, at the Rally held at the Harbour Pavilion, World Trade Centre, I told the gathering of unionists of this. Let me quote:
"…being number one is a precarious position. It is not a permanent position, and has to be earned afresh every year. The danger of being rated Number One for so long is that we get lulled into a sense of complacency. We can be blind-sided because we think we have a comfortable lead, worse still, we think an unassailable lead.
We need not be an avid student of history to know that the fortunes of countries wax and wane. In our region, Malacca was once the premier port and trading hub. It was displaced by the founding of Singapore, which has a better harbour and a superior location. Cape Town in South Africa was an important port in the Europe-Far East trade route, until the building of the Suez Canal. The experiences of Malacca and Cape Town remind us that the prosperity of town, city or country can be changed dramatically by developments elsewhere."
Later on in the same speech, I said:
"It is therefore most timely that we are reminded that we cannot take the leading positions of PSA, Changi Airport or SIA for granted."
When I look back that speech in 1997, I am left wondering what might have been, had my message been taken seriously! But better late than never!
We cannot assume that our status as an international air travel hub will remain. We have to constantly work on it to retain the status.
Advances in technology, such as lighter and stronger alloys, will allow aircraft to carry a larger payload and fly further without refuelling. Boeing has resumed work on the 777-200 LR long-haul jet after the project was mothballed after the September 11 attack on the New York World Trade Centre. The 300-passenger jet would have a range of up to 17,000 kilometres. It can fly non-stop from New York to Singapore, Los Angeles to Mumbai and Chicago to Sydney. Why stop over at Changi Airport, when you can carry more passengers and fly direct from Mumbai to the United States and from the United States to Australia? There will be more choices for airlines to pick where they would like to make a stop-over. If Singapore cannot meet their needs in terms of cost, connectivity and passengers, they would go somewhere else.
The Financial Times carried a report on 17th June 2003 on Emirates Air. The Dubai-based flag carrier unveiled the largest-ever single aircraft order in the latest chapter of a long-term plan to transform itself into one of the world's largest long-haul airlines. The development also parallels the ambitions of Dubai as a transit point to rival other trading and aviation centres. I am told that leaders in the United Arab Emirates say that they model their economic strategy on Singapore's! The Dubai airport is being rapidly expanded to provide terminals and infrastructure with a capacity to handle 61 million passengers by 2012. Traffic is forecast to rise from 16.3 million in 2002 to 51 million in 2015. Emirates Air hubs in Dubai. It can capture the Europe-Australia passengers, by-passing Singapore. Our role as an international air travel hub is being challenged, not just by other airports in the region, but by one Singaporeans think is far away!
As union leaders, we need to serve as the agent of change. It can be difficult, but it is our responsibility to look ahead. If we see potential dangers ahead of us, we must warn those whom we are elected to serve. We owe it to our workers to help them see the danger ahead and lead them down a safer path.
Opportunities
It is not all gloomy. There are still plenty of opportunities for us to build on our strengths and past achievements. For example, a growth in budget air travel in the region is not necessary a bad thing. There will still be a role for carriers such as SIA. It would be a huge torture to be cramped up in a tight seat for a 12 hour flight from Singapore to London. Comfort will still be something that people would pay for in such long-haul flights.
South-east Asia has a lot more to offer visitors, and many will want to come. As South-east Asia grows, the number of people who want to travel within and beyond South-east Asia will also grow.
The growth of budget air travel would also mean that a greater number of people could choose to travel by air to regional destinations. These non-frills airlines have redefined air travel as mass travel. To be able to fly from Kuala Lumpur to Langkawi at only 25 Singapore Dollars was unimaginable in the past. That is less than what many people and I spend on petrol each week! When more people travel by air, this would mean greater number of ground crew to support the increase in activities. And provided we keep a sharp eye on our costs, and productivity, Changi Airport can continue to win its share of the business. There will be greater number of jobs created.
Immediate Responses
What must we do to ensure that we are able to capitalize on the opportunities and overcome the threats? The greatest challenge at this moment for us is to keep our wages competitive and to ensure that our workers are well-skilled. The Straits Times carried a number of articles last Saturday on the shift of jobs to countries which can offer professional work at low cost. While we have lost some jobs to other countries, we have also gained some.
One of the areas that we have gained jobs was in the area of aircraft maintenance. The example of ST Aerospace and SIA Engineering was cited. Both companies have entered partnerships with the global air express company, FedEx, to service some of its 643 aircraft. The maintenance, repair and overhaul of aircraft are labour intensive tasks, but the flexible wage structures we have would provide an advantage. As far as FedEx was concern, this was how the company saw Singapore: "FedEx recognizes that Singapore is home to a number of the leading aerospace technicians, and the availability of skilled local employees has meant that FedEx can build its own experience maintenance crew". That's good news for your counterparts in SIA Engineering.
Provided we can do these two things - keep our wages flexible and competitive, and help our workers train and retrain to acquire new skills - we can create more jobs for Singaporeans. For you in SATS, the measures taken to deal with the impact of SARS have been painful. But a bigger task lie ahead of you - the restructuring of your wage package. It applies to you, and to the SIA Group.
Let me wish you a successful TDC!
