SIA, SATS

SIA, SATS: Qantas has announced a tie up with Emirates, and will move its hub for European flights to Dubai from Singapore. The partnership will last for 10 yrs and is expected to commence in Apr 2013. SATS is known to be a service provider for Qantas. Qantas with its Jetstar franchise accounts for approx 11% of total traffic at Changi. SIA could benefit from picking up the slack after Qantas reduces its flights from Changi. Deutsche is of view that the near-term impact on SATS will be minimal and estimates that this accounts of approx 2% of total flights handled by SATS. Though connecting flights to Europe might fall, Qantas is planning to increase point-to-point connections to Singapore from Australia as part of its restructuring of its Asian network, estimated at 25%. Finally, SATS has also recently renewed its contract with Qantas even though Emirates has a domestic co in Sg, Dnata (formerly SIAS) which alleviates concern that Qantas cld change providers in the nxt 3 yrs.