Singapore Airlines in $165m revamp

Singapore Airlines expects yields - or returns on fares - to remain under pressure on routes to Australia as Chinese and Middle Eastern carriers "throw more capacity into the market".

In a bid to boost its appeal to passengers, Singapore Airlines is spending almost $US150 million ($165 million) on modernising its first, business and economy cabins on new planes.

The new seats and in-flight entertainment system will initially be installed on eight Boeing 777-300 planes, the first of which will fly between Singapore and London in September. They will also be fitted to Airbus A350 aircraft the airline is due to take delivery of in the coming years but not to its existing fleet of A380s.

Singapore Airlines regional vice-president Subhas Menon described the changes as a refinement of its in-flight product rather than a "seismic shift". "It is an enhancement, not so much in leg-room, but in terms of comfort," he said.

The airline is working closely with Singapore's Changi Airport in an attempt to counter the threat posed by Dubai as a stopover for Australians flying to Europe. Qantas switched from flying two A380s a day to London via Singapore in late March to Dubai as part of its alliance with Emirates.

"This product unveil comes at a critical time for us because there is a lot of focus on Singapore and Changi Airport," Mr Menon said. While demand from passengers was "holding up", Mr Menon said Singapore Airlines remained concerned about yields on routes to Australia due to stronger competition.

Chinese airlines such as China Southern have been significantly increasing flights to Australia over the past two years, adding to the intense competition from Middle Eastern airlines Emirates, Etihad and Qatar Airways.

"There is a lot of competition in the market now, and yields are of course challenged. Fortunately for us, demand is holding up at not only the end of the bus but the front end," he said.

"[But] as far as yields are concerned, we are not very optimistic because of the competition."

Mr Menon said Singapore Airlines expected a weaker Australian dollar to eventually affect demand but had yet to experience it because the currency was still relatively strong in historical terms.

"The immediate outlook is a bit patchy because of the election and the uncertainty in Australia. But after the elections I think we will see a bounce back - as we have seen in previous years," he said.

Singapore Airlines posted a decline in yields of 3 to 5 per cent across its route network last financial year. The airline, which has a 20 per cent stake in Virgin Australia, has also expanded aggressively on routes to Australia over the past year.