SIA and S'pore GP: Symbiotic partnership

SARONG KEBAYA ON THE GRID: An SIA air stewardess posing with a Lotus F1 car at the announcement of the sponsorship deal on Tuesday.


    Apr 17, 2014

    SIA and S'pore GP: Symbiotic partnership

    SINGAPORE Airlines is not just an icon in the world of commercial aviation. It is also a company which is well known for its extremely thorough due-diligence process.

    For example, its approach to selecting the planes for its fleet is more than just the stuff of urban legend in the industry.

    The CEO of a leading international airline once let on that his team, like many others in the industry, often waits to see what SIA does before making their decision on a plane-type.

    "Nobody will spend time and money to reinvent the wheel after SIA has engineered it so precisely."

    A case in point was the A380, whose popularity took off largely after SIA committed to the giant plane and became the first to fly it some seven years ago.

    And many in the industry still recall how former SIA CEO Chew Choon Seng's remarks about the original Airbus A350 being too narrow prompted the European plane maker to redesign the plane, which is now known as the A350XWB (extra wide body). SIA promptly placed orders for 20 of these planes, and was quickly followed by others.

    So when it was announced yesterday that SIA would be the title sponsor of the Formula 1 Singapore Grand Prix for two years, starting this September, many observers saw this as being in character.

    As one wit noted, SIA may have been interested in the Singapore GP sponsorship for a while, but it decided to let SingTel bear "the tuition fees".

    That might seem somewhat harsh to SingTel, which, after all, has had a good run with its six-year sponsorship, which some estimate to be worth $100 million.

    But there is no denying that SIA is stepping in only after the event has established itself as a well-oiled marquee race on the F1 calendar.

    Today, the F1 Singapore GP is one of the most popular events on the F1 calendar, attracting around 260,000 spectators over three race days, and generating more than $150 million in incremental tourism receipts per race.

    It is estimated that some 250,000 international visitors came to Singapore for the last six races, with many hailing from non-traditional tourism source markets. And the event attracts almost 100 million television viewers from all over the world every September.

    And here's the thing: Despite its global investments, SingTel is essentially a Singapore-centric entity.

    On the other hand, SIA is a Singapore company with a critical global profile.

    Thus, SIA would have studied the costs and benefits of being associated with this event. It would have assessed the boost to its brand and business from having its name emblazoned in lights across TV screens all over the world.

    Yes, just like the due diligence it does when it picks its planes and plans its routes, SIA would have done its sums carefully.

    The two-year commitment - which is extendable - to the Singapore F1 dovetails nicely with the airline's strategic objectives, be it boosting its cargo business, re-energising networks, rewarding its priority passengers and other customers, or burnishing its branding or market positioning.

    With the inking of the sponsorship, SIA now joins the ranks of some of its keenest competitors - Etihad, Qatar, GulfAir and Emirates - which spend tens of millions on global sponsorship events that range from football and golf to motorsports and sea sports.

    Last year, Emirates became a global partner with Formula One, signing a five-year sponsorship deal that pushed the Dubai-based airline's total sports sponsorship for last year to around US$272 million (S$341 million).

    SIA, with almost $5 billion in the kitty, can afford this Singapore F1 ride. Up to now, the company's involvement in sports sponsorship has been somewhat limited and local.

    Its SIA Cup derby is popular but draws a rather specific crowd. Its other sports involvements have been modest and fly under the radar.

    Like most sponsorships, the SIA-SGP partnership is symbiotic.

    While the Singapore F1 will benefit from the association with a global brand that SIA has become, the airline will leverage on this iconic sports event to further raise its global profile and presence at a time when the competition - via imitation and innovation - is real and serious.