WRITTEN BY: FELICITY STREDDER | 03/08/2016
In recent weeks, an article was released on the price war between SATS and dnata, as the two fought to win handling contracts at Changi airport. A follow-up interview reveals SATS CEO Alex Hungate's perspective.
Responding in Today’s article on the so-called “price war”, Mark Edwards, CEO of dnata, said that he was struggling to understand the strategy of his competitor, which seemed only to be about cutting prices, despite the reality of escalating costs. "My costs in real terms have increased somewhere around 2%. Profits are falling off the cliff and I am not sure where we end up.”
In contrast to Edwards’ statement and to his concern over the unsustainable nature of the negotiations, SATS’ Hungate said: “Of course, all of our markets involve competition. So, the market place continues to be competitive. I wouldn’t say that there is an increase in the competitive pressures, but I think they continue as they have been.”
According to Hui Leong Chin’s article on The Motley Fool, released today, Hungate maintained this position when asked about the aforementioned feature on the price war. “We did see the article, of course, on the price war. We weren’t aware there was a price war, to be honest. I think you saw that we commented that we are a premium player, we don’t compete on price, we compete on quality. But we also compete on the unique network that we have," Hungate stated, before adding that the company now operates at 45 airports across 12 countries.
After going on to call the SATS network, "the most complete network of airports across the region," Hungate reportedly concluded: “So I deliberately, in the commentary on the outlook statement, mentioned that yes, of course, our markets are competitive. But they always have been. We don’t see a particular intensification of the competition over the last twelve months or last quarter, or whatever the article was meant to be referring to.”
To SATS, it seems, the intense negotiations on price at Changi airport were merely standard practice, and no increase in the level of competition was observed, either. What’s more, despite already considering itself to have the advantage, following a recent announcement of plans to invest millions automating its kitchens, SATS would appear to have an active strategy in place to improve its competitive edge in the region further still.
News cited from magazine.groundhandling.com