SIA's Investment in Air India and Obligations under the CAAS Act

Oral Reply to Parliamentary Question

Mr Kenneth Tiong Boon Kiat asked the Minister for Transport since Singapore Airlines became a designated operating entity under the Civil Aviation Authority of Singapore Act 2009
a.            whether losses from and carrying amount in its foreign associates have been assessed against its capacity to provide essential transport services; and

b.            whether such losses, or a continuing pattern thereof, would engage the notification duty in section 67B, and on what criterion.

Reply by Minister for Transport Jeffrey Siow:

1.            Mr Speaker, the Member's question is about the Civil Aviation Authority of Singapore (CAAS) Act.

a.            But he has indicated publicly that his real concern behind this question is Singapore Airlines’ investment in Air India.

b.            So let me answer the question as filed first, and then address the actual concern.

2.            Singapore Airlines (SIA) became a designated operating entity under the CAAS Act from 15 April 2025, after the Transport Sector (Critical Firms) Act came into force – so this has been about 16 months.

a.            CAAS considers a variety of factors in assessing whether SIA is able to operate essential services here safely and reliably. These include SIA’s overall financial health, amongst other factors.

3.            Section 67B is, to be clear, not a financial reporting rule.

a.            It is broader than that.

b.            SIA is required to report if there is an event or irregularity that may materially impede or impair the provision of essential transport services, but losses in a foreign associate do not necessarily meet that test on their own.

c.            The relevant question is whether such losses, or anything else, reach the point of materially constraining the resources available for SIA's fleet, maintenance or network operations here.

d.            That is a judgment based on facts. We are nowhere close to this scenario.

e.            At present, there is no reason for us to doubt SIA’s ability to deliver air services in Singapore.

f.            In fact, SIA's core business had one of its strongest years – record revenue, high operating profit margins, and a record number of passengers carried.

4.            Let me now deal with the Member’s concern about SIA’s investment in Air India.

a.            SIA has been open about this investment and the considerations behind it. It has discussed this with shareholders extensively at its Annual General Meeting in July, and more recently set out its considerations in a letter to the Business Times on the 29th August.

b.            Temasek, as SIA’s major shareholder, has also expressed its support in a separate letter to the Business Times.

c.            The Member has insinuated that Singaporeans are somehow paying for the Air India investment. This is not the case.

d.            SIA is a listed company that funds its investments from its own balance sheet and earnings, and it has more than S$10 billion in cash reserves and over S$3 billion in undrawn credit facilities.

e.            SIA has not sought further capital from its shareholders. And if it were to do so, that would be a commercial matter between the company and its shareholders.

5.            The Member is nevertheless entitled to his opinion on whether SIA’s investment in Air India is a good investment.

a.            But what we discuss in this house should not substitute for the careful commercial judgement of seasoned professionals in SIA’s management and board.

b.            The reasoning behind SIA’s investment is not hard to follow.

c.            A large share of SIA’s air traffic today comprises transfer or transit passengers.

d.            To grow further, SIA must expand overseas, because there is a limit to how many people will ever fly to and from Singapore.

e.            But accessing overseas markets is not straightforward, because aviation is a highly nationally sensitive sector. Air traffic rights and airport slots often depend on who your partner is.

f.            Through Air India, SIA gains deeper access to one of the largest aviation markets in the world by passenger traffic, and a strategic location for onward connections to Europe and the Middle East.

g.            Many overseas returns will not necessarily emerge immediately.

h.            Whether its specific investment in Air India proves valuable is for SIA and its shareholders to answer.

i.            What I can tell this House is that at present, CAAS’ assessment remains that SIA’s ability to serve Singaporeans is not adversely affected.

6.            Thank you.