Plans by Singapore Airlines to cut capacity by 11 per cent and to reduce its fleet by 17 aircraft because of the global economic downturn will not affect Australia greatly, according to the airline.

A spokesman said the carrier was still finalising details of how the reduction would affect specific routes but core flights to Australia were expected to remain intact. He expected cuts to be limited largely to already announced reductions of flights to Perth, Sydney and Brisbane.

The airline is talking to unions about ways of offsetting a sharp drop in passenger and cargo demand. The carrier, which had originally planned to phase out four aircraft in the next financial year, reported last week a 43 per cent fall in third-quarter profit to $S337 million ($343 million), as passenger numbers fell 4.2 per cent and freight slumped by 14.2per cent.

"Given the falls of more than 20 per cent that we have seen recently in air cargo shipments and the tradition of demand for air travel following closely behind trends on the cargo side of the business, we have to face the reality that 2009 is going to be a very difficult year," the airline’s chief executive, Chew Choon Seng, said.

"Singapore Airlines does not have a domestic operation to soften the blow from the slump in international air traffic and we have to act decisively to address the situation.

"We have determined the capacity to be operated that will enable the airline to remain viable in a shrinking market, but the removal of surplus capacity will result in redundant resources and will draw sacrifices from every one of us in the company."

Mr Chew said the company would consider retrenchment only as a last resort, but warned time was running out. The airline needed to act on some measures quickly and was talking to unions about measures such as accelerated clearance of leave entitlements, voluntary leave without pay, voluntary early retirement and shorter work months, he said.

Qantas announced this week that it would stop flying between Sydney and Beijing from April 17, and from Melbourne to Shanghai from March 31, but would boost its Sydney-Shanghai flights to daily from March 31. It would also operate its three-times weekly services to Mumbai via Singapore from mid-May.

Qantas chief executive Alan Joyce said the airline had been closely monitoring its international operations since the global economy began deteriorating in late 2008 and it was performing well in a difficult environment. It would, however, have to deal with underperforming routes, he said.

source: www.theaustralian.news.com.au