Now into its second year of the sponsorship deal between Singapore Airlines (SIA) and the Formula One Grand Prix, the national carrier said it is reaping the returns in both commercial and intangible terms.
Industry observers added that financially, the deal is estimated to have more than paid off the investment. SIA said its involvement is not just about advertising its name, it is about bringing the sport to the community.
But being the national carrier, SIA also benefits from higher ticket sales as fans from the region fly into Singapore to enjoy the only night race on the F1 calendar.
According to observers, while sponsorships tend to be a more integral part of business in the West, the landscape is less developed in Asia. So as one of the early movers, some said SIA is likely to have higher returns on investment.
Details of the sponsorship are kept confidential, and there are no numbers from SIA on how the F1 tie-up helps its bottomline.
But one industry watcher estimates that it is likely to have paid off financially.
Mr Jochen Wirtz, Professor of Marketing at NUS Business School, said: “Just from a financial point of view, a breakeven would be somewhere between 10,000 to 20,000 tickets. And if you look at the numbers, there are about 85,000 visitors to F1, of which about 40,000 fly in from other countries.
“That means for SIA to break even, they have to capture about 25 to 50 per cent of this incremental travel, and I think that is not an unreasonable number. So just on short-term financials, I think there is a good possibility for Singapore Airlines to break even.”
Mr Wirtz said this does not include the intangible benefits to SIA, such as marketing exposure and greater brand recognition globally.
SIA itself recognises that the partnership helps to enhance its brand image and international exposure.
Said Mr Sheldon Hee, vice president of marketing communications and development at Singapore Airlines: “The global economy goes through its cycles. And for us, building on a platform like the Formula One, the Singapore race is an opportunity for us to position Singapore and Singapore Airlines in the minds of consumers, be it now or be it in a couple of years when they can travel again.
“There will be opportunities for us to capture some of this interest, and hopefully bring them via Singapore or into Singapore on Singapore Airlines.”
SIA recently announced that it would extend its sponsorship of the Grand Prix event until 2017.
Source: www.channelnewsasia.com
