SIA Continues Backing Singapore F1; Investment Unlikely Elsewhere in Asia

The national carrier first came on board the Formula 1 in 2014 and has continued its title sponsorship unbroken since. SIA CEO Goh Choon Phong said that the Formula 1 Singapore Airlines Singapore GP is a blockbuster draw in the nation’s sporting calendar, attracting massive crowds to view the Night Race and associated entertainment line-ups. “We are pleased to be continuing as title sponsor, and helping to further enhance both sports and tourism for the benefit of Singaporeans and visitors alike,” he added.

Meanwhile, Formula 1 Chairman and CEO Chase Carey said as one of the premier events on the race calendar, loved by the fans and drivers, the race has found an ideal partner Singapore’s national carrier.

“Singapore Airlines has been working closely with Formula 1 at the Marina Bay Circuit since 2014 and during that time we have seen brilliant races under the lights of an amazing circuit. We are looking forward to this year’s race that should, if the past eleven years is anything to go by, provide an amazing spectacle and a physically demanding race for the drivers,” he added.

The extension aligns with Singapore Tourism Board’s host venue contract with Formula 1 , which was extended in 2017 for 4 years.

According to ASN data, SIA is ranked second for its category (15.8% share) just behind Japan Airlines (17%), over the last three years. However, this surprising ranking has been almost wholly buttressed by three years of title sponsorship at the F1, which is easy to see when you deduct US$45m (a F1 title sponsorship is usually priced in the US$15m p.a. range) from its 3-year total spend of US$48.3m.

Otherwise, the airline continues to be super cautious in the Sponsorship market across Asia, preferring to spend on more traditional marketing channels. The company notorious in the sponsorship industry for doing much cheaper VIK (value-in-kind) deals, bartering airline seats for rights at events – if they sponsor at all which is infrequent as we can see.

The remaining ~US$3m of deals (~US$1m p.a.) comprise of ‘national support’ sponsorship for platforms such as the Singapore National Olympic programme.

And looking contextually, this renewal has been completed in the face of an alarming decline in business performance for SIA in the last few years. In the FY 2018, the airline’s net profit fell by 47.5 per cent to US$496m from US$945m in the previous year, despite hitting a record revenue of slightly over US$11.9b for the year. So, for the Grand Prix, it is good news, but one can imagine that there was a lot of resistance to this renewal and we don’t see SIA extending the deal in 2021 unless the company performs a spectacular turn-around in profits.