Impact of SIA's Foreign Associates' Losses and Carrying Capacity on Provision of Essential Transport Services

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.

Mr Speaker, the Member's question is about the Civil Aviation Authority of Singapore (CAAS) Act, but he has spoken publicly about Singapore Airlines' (SIA's) investment in Air India. So, let me answer the question as filed first, and then address the actual concern.

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 is about 16 months.

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.

Section 67B, to be clear, is not a financial reporting rule. It is broader than that. 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.

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. That is a judgement based on facts.

We are nowhere close to this scenario. At present, there is no reason for us to doubt SIA’s ability to deliver air services in Singapore. 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.

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

SIA has been open about this investment and the considerations behind it. It has discussed this extensively with shareholders at its Annual General Meeting in July and more recently, it set out its considerations in a letter to the Business Times on 29 August. Temasek Holdings, as SIA's major shareholder, has also expressed its support in a separate letter to the Business Times.

The Member has also suggested that Singaporeans are somehow paying for the Air India investment. That is not the case.

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

The Member is entitled to his opinion on whether SIA's investment in Air India is a good investment. But what we discuss in this House should not substitute for the careful commercial judgement of seasoned professionals in SIA's management and board.

The reasoning behind SIA's investment is not hard to follow. A large share of SIA's air traffic today comprises transfer or transit passengers. To grow further, SIA must expand overseas because there is a limit to how many people will ever fly to or from Singapore.

But accessing overseas markets is not straightforward. Aviation is a highly regulated and nationally sensitive sector. Air traffic rights and airport slots often depend on strong local partnerships. 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.

Many overseas investment returns will not necessarily emerge immediately. Whether its specific investment in Air India proves valuable is for SIA and its shareholders to answer. What I can tell this House is that at present, CAAS' assessment remains that SIA's ability to serve Singaporeans is not adversely affected.

Mr Tiong.

Thank you, Sir. Senior Minister Shanmugam said over the weekend that it is a commercial decision for SIA's board. Let us hold it to that standard. Four facts and two supplementary questions.

Fact: SIA is in net debt. As of 30 June, it held S$10.5 billion in cash against S$10.7 billion in debt. And despite doing well in its core business, it posted a net loss for the quarter. The undrawn facilities the Minister cited are loans not yet taken. More debt, not more capital.

Fact: airline turnarounds that work show it within three years. Japan Airlines went from bankruptcy to relisting in under three. Qantas went from a record AUD2.8 billion loss to a record profit in two. Air India's own plan in 2022 said five years. Its losses doubled last year, and its chairman now says five to 10.

Fact: Indigo carries two thirds of India's domestic passengers. The Air India group carries about 24%. And the ground can shift. Air India's hubs are Delhi and Mumbai – airports run by GMR Group and Adani Group. India is said to be weighing lifting the rule that keeps both GMR and Adani from owning an airline. So, that means that the landlord at each of Air India's hubs would then also be its competitor and could steer the prime slots that the Minister mentioned its own way.

Fact: SIA holds 25.1% and does not control Air India. Its own filing says future injections will be considered based on Air India's requirements – open-ended by design.

I support SIA's ability to make its own decisions, but I do not support further cash infusions from Temasek to stand behind a decision that on these facts, reasonable members of the public are questioning.

Two supplementary questions.

One, in 2020, Temasek, whose capital is part of our past reserves, underwrote SIA's S$8.8 billion recapitalisation. And this House was told the Government would provide more direct support if necessary. If Air India goes wrong, will the Government rule out doing so again?

Two, SIA is a designated entity under the Transport Sector (Critical Firms) Act, precisely so that its capacity to provide essential services is safeguarded. Has the Government satisfied itself that there is a limit on SIA's further cash to Air India, a return threshold, a maximum exposure, a point at which it stops? This cannot be a blank cheque, least of all on a minority stake.

We ask because through the reserves, Singaporeans are SIA's stakeholder of last resort, and the stakeholder of last resort needs to know where the line is.

Mr Speaker, let me first correct a basic misconception in the Member's argument. SIA owns 25.1% of Air India, but Air India's finances are not SIA's finances. Air India's losses do not automatically become SIA's liabilities. Neither does the capital request from Air India oblige SIA to provide it.

SIA has already said that its board will consider any capital request on its commercial merits. That is the right approach. SIA's board and management must decide whether any investment makes commercial sense for it and its shareholders.

The Member cited SIA's debt to claim that SIA's financial position is precarious. I think he may have misunderstood SIA's published financial statements. Most of SIA's debt is in non-current long-term borrowing, such as five- or 10-year bonds, which generally have low interest rates. Its current liabilities within the next 12 months are under S$3 billion, which is well within SIA's cash reserves of over S$10 billion.

Mr Speaker, the Member has told us that he is against putting more money into Air India, but he has not said what SIA should do. Is the Member's position that SIA should never have gone into India, that our flag carrier should not try to participate in one of the fastest growing aviation markets in the world? Or does he think that SIA should sell its Air India's stake now, and if so, to whom and at what price? He has said that he would not support any new capital request, but does he feel that SIA's board should refuse any capital request regardless of the business case?

It is easy to criticise, but I suspect it is much harder for the Member to tell us what SIA should do. And so, I would suggest that the best course of action is to leave the board and the management of SIA to make the decisions because it is their duty and their responsibility to do so.

Mr Speaker, only last month in our debate on growing local enterprises, the Member himself claimed that Singapore hosts many large companies but builds few of them. Well, building globally competitive companies means entering potentially difficult markets against people who got there first and staying the course when there is turbulence. We cannot have it both ways. We cannot tell our companies to go out and compete, and then treat every tough year abroad as proof that they should stay home. This is true for small and medium enterprises. It is also true for Temasek Portfolio Companies, like SIA.

The Member has asked how Temasek, and by extension, our reserves will be affected. Well, the Government does not judge Temasek on any single holding. Temasek has a portfolio of over $500 billion. A portfolio that size will always contain investments with different risks and time horizons. Some will look worse than others on any given day – and that is what investing is. If SIA requests capital from Temasek for any reason, Temasek will have to assess this on a commercial basis.

I wish to note that in over 50 years of operation, SIA has not requested any funding from Temasek, apart from during COVID-19. But the situation during COVID-19 was fundamentally different. Aviation was at a standstill. Flights were grounded all across the world. Passenger traffic through Changi had fallen by more than 90% and SIA had to cut its scheduled capacity by 96%. SIA's incoming revenue was almost zero and was losing $400 million a month – $4.3 billion that year to be exact. And most importantly, SIA did not know or have any control over when that situation was going to end. But that was a totally different situation from the Air India investment.

On Temasek being a backstop and what we would do, let me just explain what actually happened again in 2020. The Government provided significant support but this was for the whole aviation sector, not just SIA alone. We supported companies in the sector through enhanced wage support, rental relief and rebates for certain fees and charges, and to protect our air hub. Even with the support, SIA needed additional liquidity and so, we decided to issue $15 billion in fresh equity and bonds to its shareholders. Temasek, in turn, made a commercial decision to underwrite this issuance, meaning that it committed to buy any shares or bonds not purchased by other shareholders. Temasek explained the reasons publicly then, that it is because they expected air travel to return. And with the eventual recovery, Temasek made a good return from the equity and the bonds that it purchased from SIA.

Mr Speaker, I wish to make one final point. The Member has stated online that he strongly rejects the racist and xenophobic comments that have arisen in the public discussion on Air India. I am glad he agrees with the Government that no one should seek to exploit racial divisions for political purposes.

But the Member's public rhetoric goes beyond the question that he puts before this House. In Parliament, he has posed a narrowly-framed technical query on SIA's capacity to provide essential transport services. I have explained that there is no adverse impact.

Yet, by asking his question this way, he has drawn an imaginary link between an overseas investment from SIA and its ability to maintain air services in Singapore. Outside this Chamber, on social media, the Member has asked what happens if this deal goes bad? Will Temasek be the backstop and what will this mean for Singaporeans' taxes and their quality of life?

He has drawn these multiple tenuous linkages, dressed them up in emotive terms, insinuated that through SIA's investments, Singaporeans somehow owe Air India a living, and suggested that SIA is not making its investment decisions on a commercial basis, but for some other reason.

There is no basis for this.

The Member is free to question whether Air India will ultimately prove to be a good investment for SIA, but it is quite another thing for a former business analyst to take a commercial investment risk, extrapolate that into the financial failure of our national airline and from there, speculate and whip up alarm about a taxpayer bailout. To insinuate improper motives that any particular investment does not provide or contribute to a healthy climate for our companies to make commercial decisions which serve the best interest of Singapore and Singaporeans.

Mr Tiong.

I will take the points in reverse order.

The Minister talked about racism and xenophobia. Let me just be very clear that I categorically reject both racism and xenophobia. I condemn it. But also, I am puzzled as to why it is brought into a purely commercial matter. The question of Air India and its open-ended capital call on SIA, and possibly Temasek, is a question of great interest for all Singaporeans. We need to understand what the risk limits are. And to suggest that the questioning of this issue is being racist or xenophobic or imputing improper motives, I have done no such thing. All I have said is that we need to know where the risk limits are in this case. And I refer everyone to my statement that I made on Facebook on this matter, where I could not have been clearer that I condemn all such racist and xenophobic activities.

On the question of what I think SIA should do instead, I think, again, the Minister seems to misunderstand. This is something that is very common in the private sector. For example, if I can draw an analogy: how does a financial fund work? There is an investment team and there is a risk team. The investment team can trade whatever it likes within its risk limits. If you are a commodities team, you can trade zinc back-end spreads, gold leasing and copper arbitrage. The risk team does not pick the trades. It sets the limits and holds the team to them – how much, at what return; where does it stop? That is what keeps the fund honest.

No serious fund lets the investment team set its own risk limits.

So, Parliament is the risk function for the reserves and SIA's board is the investment team. I am not going to tell SIA what to do, what its strategy should be. I am saying that this is quite risky. I am not saying that it is constituted from improper motives but it is very, very risky. Especially because it is constituted on a 25.1% minority stake. So, we need to understand because it could have implications on the reserves and it could have implications for SIA as a designated operator. So, I am not going to direct the investment.

And the Minister says, how should we participate in India in any case. I will say that India is a very, very complicated market. As I mentioned, Adani and GMR have potentially been given the option to set up their own airlines. Indigo controls 67% of the domestic market. Friends from India tell me overwhelmingly that Indigo is the de facto national carrier. So, there are many ways to play the Indian market.

And I think that the question of control is actually a very, very important one. I agree with Mr Lee Kuan Yew when he said earlier on that, when it was proposed to take a minority stake of 40% with Tata, in Air India, that he thought it would not be a great idea because you lack the operational control to direct the turnaround.

And so, I note that in other aviation businesses, such as SATS, for instance, these businesses do actually have some degree of operational control. Whereas with Air India and SIA, it is a completely different story. It is a minority stake, we do not have operational control. So, therefore we need to evaluate this investment very, very carefully.

Mr Speaker, India is indeed a complicated market. By law, no foreign airline in India can have a majority stake. But Mr Speaker, I have done a long clarification on the points that the Member has raised. I will not repeat them here. I will just say that the Member's intentions are for him to explain. He is entitled to question whether this investment by SIA will succeed.

But the point I wish to make is that the Member has gone much further, leaping without evidence from Air India's losses to SIA's ability to provide essential air services, capital calls on Temasek and consequences for Singapore's taxes and quality of life.

Members may ask difficult questions but the claims we make must be grounded in facts, not exaggerated speculation that creates needless public alarm. Singaporeans deserve public debate that examines the risks honestly, explains them responsibly and remains anchored on truth and logic.

I want to move on. Mr Saktiandi Supaat.