The iconic Singapore Girl greeting us at the passenger entrance of Singapore Airlines (SIA) flights; This is an experience missed by many for almost two years already.
The pandemic continues to rage on and a safe reopening of our borders has proven to be harder than we thought.
Last month, SIA said its net loss for the three months ended June was S$409.2 million, albeit an improvement from S$1.1 billion a year ago, as border and travel restrictions remained largely unchanged.
The narrowed net loss may seem like a respite for the group and investors but the aviation industry’s outlook remains dim due to recent virus flare-ups in the region. For example, the Covid-19 “Delta Variant” has proven to be almost twice as transmissible as the original Covid-19 strain and has caused many of Singapore’s border reopening plans to go on hold.
Even though most of its fleet is grounded, SIA has not been a sitting duck. It has rolled out many new initiatives over the past one-and-a-half years, with many aimed at e-commerce and the internet economy. These include payment wallet Kris+ and activities booking platform Pelago.
The new business verticals complement SIA’s main airline operations. For example, one can use KrisFlyer miles to pay for services on the new Kris+ digital wallet.
Launched in October last year, SIA’s investment in Kris+ is part of the company’s ongoing strategy to drive non-airline revenue streams in the coming years.
Another internet product, Pelago, was launched officially in June this year and sells holiday experiences within Singapore. It is both an online magazine and booking portal that publishes articles of suggested activities in a destination city – like a craft beer tour – and lets travelers reserve activity slots.
We take a look at these offerings and peek into how SIA is adapting in this new normal through its push for non-aviation businesses.
What is Kris+
Kris+ aims to be a one-stop platform that offers payment, lifestyle, and reward services for customers. Kris+ was built on the airline’s existing KrisPay app, which is a blockchain-based airline loyalty digital wallet.
KrisPay was launched in 2018 and it aimed to give customers the option to use the airline’s loyalty program KrisFlyer miles to purchase everyday items. It also offers customers the option to earn miles.
The Kris+ app is a further development of KrisPay, as it taps the blockchain technology to easily onboard new partners and reconcile payments. Benefits of using blockchain technology include reduced cost and increased efficiency.
It is also easy for customers to convert their KrisFlyer air miles to spend on purchases at partner outlets via simple point-of-sale transactions. With blockchain being immutable and permanent, there’s also an ease of handling miles-based transactions without the concern for mistakes.
Kris+ allows SIA to personalise offers to its customers based on location and interest. Articles state that Kris+ has more than 175 partners with over 650 outlets in Singapore.
The app has been downloaded over 130,000 times at the App Store (for iOS) and Play Store on Google Play (for Android).
How to use Kris+
Users can use the Kris+ app at food joints like Polar Puffs and Gong Cha bubble tea to offset their purchases via KrisFlyer miles.
The miles earned from daily spendings can also be used to pay for purchases and for redemptions and discounts.
SIA has revealed that it plans to enhance the Kris+ app with other in-app payment options, allowing users to simultaneously earn more miles with each purchase.
Merchants can onboard to tap SIA’s 4.7 million KrisFlyer base. More partners are expected to be progressively added in the coming months.
Kris+ ia also targeting non-frequent flyer users to join the KrisFlyer program, which in turn will expand the firm’s reach to new users who may consider flying with the airline next time when borders reopen further.
The Kris+ ecosystem, which has been built to enhance customer-merchant relationships, is expected to further power growth for the KrisFlyer frequent flyer business and broaden its brand appeal and recognition.
The app has also been launched overseas. In February, it was released in India and is currently available in over 1,500 outlets across the country.
Activities platform Pelago
After a beta product launch in October 2020 and continued product iteration, Pelago officially launched in Singapore in June this year. The roll out of the digital e-commerce subsidiary Pelago was done without much fanfare.
In an investor call in November, SIA’s CEO Goh Choon Phong described Pelago as “a brand new business that’s been set up within SIA” with a goal of “extending the SIA experience from the skies to the ground.”
SIA’s formation of digital e-commerce subsidiaries reflects a broader trend of airline companies trying to use their brand names and customer bases to stretch into the online sales of other products and services.
Pelago also fits into SIA’s broader pattern of dabbling in e-commerce. For some time, the airline has been touting the use of its frequent flier program KrisFlyer as a way to buy non-flight products.
The new subsidiary is said to have a staff of 50. The brand offers more than 200 experiences to users, such as workshops on pottery making or being a beekeeper.
What can I do with Pelago
Consumers can use and earn miles in KrisFlyer by buying activities through Pelago.
Pelago currently focuses on Singapore, where visitors can book anything from a beer-sampling experience for S$40 to a two-hour SIAs’ flight simulator session for S$699. Other destinations in the Asia Pacific are in the pipeline.
Pelago maintains that they offer competitive prices, with a dedicated section for experiences available for under S$50.
As of today, Pelago only markets experiences in Singapore, but it intends to grow abroad. As travel gradually normalises, it looks forward to bringing the unique and curated experiences in the destinations consumers travel to with SIA on the platform.
An integration of the Kris+ app with Pelago seems likely as the former is used to pay for shopping and meals while the latter provides extended services for activities.
Other airline firms doing the same
SIA’s endeavours aren’t unique in the aviation industry.
In October, AirAsia Group announced it “successfully pivoted” the airline into a digital lifestyle company, anchored on travel. AirAsia’s digital arm bought over ride-hailing app Gojek’s Thailand operations in a deal that valued AirAsia’s budding superapp at US$1 billion.
In Japan, ANA Group has been working since March to launch a mileage based app ANA X for the Japanese market only. It said it plans to secure future growth by strengthening its non-aviation business.
“We’re trying to break away from the aviation business only, expanding non-aviation revenue on a super app covering not only out-of-the-ordinary services, such as flight or travel, but also ordinary life services,” ANA X president, Shinichi Inoue had said at the news conference.
No clear skies ahead for aviation industry
The growing pace of countrywide vaccination exercises provides hope for further recovery in international air travel demand. In Singapore, the mass vaccination exercise has reached 80 per cent of the population.
However, the risk of new variants and fresh waves of Covid-19 infections in key markets remains a concern.
In the recent earnings announcement, SIA said the recovery trajectory will be dependent on government regulations, vaccination rates, and the risk profile of individual regulatory authorities.
“Continuously innovating and improving our product and service offerings remains central to our brand promise,” SIA said.
The SIA Group’s transformation programme aims to drive digital leadership and excellence in product and services, while enhancing health and safety measures across the end-to-end travel journey. This will ensure that customers continue to have a world-class experience when they fly with us in the new normal,” SIA said.
The group will also actively pursue new engines of revenue growth, as well as initiatives to achieve a more competitive cost base to secure its financial sustainability.
SIA added that it will remain nimble and flexible during this time, and be alert to all possible revenue and growth opportunities that may arise, while it strongly supports all efforts to facilitate the safe resumption of international passenger travel.
Featured Image Credit: Bloomberg, Singapore Airlines