Thursday, November 3, 2011

Scoot- SIA’s new subsidiary says it has attitude

Neelam Mathews
Nov 3, 2011

On SIA’s new medium-to-long-haul budget carrier, named Scoot with the first flight set for the end of the first half of 2012, CEO Campbell Wilson said: “We chose the name ‘Scoot’ for many reasons, not least because it’s different. Rather than the tried and tired ‘airlines’ this, ‘airways’ that or ‘air’ yawn, it’s short, sharp and snappy. It stands out.”

“We have a very different attitude… We have a short, sharp name that exemplifies that attitude that we want more of our staff to have to interact with others. We have a unique attitude and we want our staff to have ‘Scootitude’,” he added.

Scoot starts with a fleet of four Boeing 777-200 aircraft with plans for 14 aircraft by 2015.

Scoot will not look to take any existing routes covered by SIA. It plans to fly to India, Europe, Africa and the Middle East. Wilson told reporters at Scoot’s 01-Nov-2011 brand launch event in Singapore that the carrier will serve at least four routes within its first year. He said Scoot is still in the process of finalising its initial network but confirmed Australia and China are high on its list. Wilson says Scoot is open to secondary cities and alternative airports as well as primary hubs. 

It has not yet been decided if a formal codeshare will be implemented from the beginning. At the very least, Scoot will offer a transfer product which will allow its passengers to connect with SIA as well as other carriers using Changi’s world-class transit facilities, says CAPA.

Scoot is pursuing the same unbundling strategy as AirAsia X, Jetstar and most LCCs, offering no complimentary frills. Items such as food and check-in luggage (at least for economy class passengers) will be offered a la carte with passengers “paying only for that what matters to you”. The unbundling strategy will allow Scoot to keep average economy fares 40% lower than legacy carriers, which in the Asia offering sees the addition for several frills including complimentary food, drinks, check-in luggage and IFE, adds a CAPA report.

The IFE systems and seats are two of Scoot’s significant pre-launch investments. Mr Wilson expects the carrier will spend SGD50 million (USD39 million) to SGD60 million (USD47 million) before its first flight. SIA Group has capitalised the new subsidiary with an initial tranche of SGD283 million (USD222 million).

The airline is expected to compete with AirAsiaX. In a tweet, Tony Fernandes, founder AirAsiaX scoffed: “Wonder if Singapore Airlines will call it Singapore X.”

Scoot will probably never be included in the LCC history books like the chapters Tony Fernnandes has written in establishing AirAsia and AirAsia X. But while being a pioneer can provide important first mover advantage, it also critical to join a trend before it’s too late. With SIA's only very recent attempt to become more involved with Tiger, SIA joined the short-haul low-cost party too late. The long-haul low-cost trend, however, has just begun, making SIA’s bet with Scoot risky but potentially more rewarding. Other carriers throughout Asia and the world will be closely monitoring Scoot’s developments, says the report.

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