SIA long-haul budget carrier to start operations in April

Manila Bulletin
October 13, 2011

Singapore Airlines' new low-cost, long-haul carrier is slated to take off in April next year with one Boeing 777-200 and expand to four planes in the first three months.

The longer-term plan is for Scoot Airlines, as the new entity could be called, to operate 14 of the twin-aisle planes by the middle of 2016, The Straits Times has learnt.

Regional carrier SilkAir, another SIA subsidiary, has a fleet of 18 aircraft.

The new airline, a critical part of SIA's strategy to deal with intensifying competition from rival carriers, is expected to fit each of its B-777 with about 400 seats.

SIA, which will provide the initial few aircraft from its existing fleet, currently configures its B-777 to carry up to 323 passengers in two classes.

The Straits Times has also found out that as part of the retrofitting, the new carrier intends to make its aircraft Wi-Fi enabled.

This will allow passengers, willing to pay for the service, to surf the Internet and access Web-based applications using laptops, tablet computers and smartphones.

The airline is also studying the feasibility of renting the devices for inflight entertainment. Charging customers for extras, which also include food and drinks, is part of the low-cost model adopted for the new carrier.

When contacted, a spokesman for the new airline did not confirm any of the information which The Straits Times had obtained from documents provided to vendors for the aircraft-retrofitting works.

She said operational and other plans are still being finalised.

Industry watchers note that SIA's entry into the market is well-timed. If there is a global slowdown, the premium air travel market will be hit as customers settle for cheaper options.

Hence, the need for a Scoot alternative for which SIA is targeting destinations which are more than four hours from Singapore, such as those within the region, Australia, New Zealand, Europe and the United States.

Low-cost competitors in the long-haul market include Jetstar and AirAsia X.

With about six months to go before the launch of the new carrier, recruitment of B-777 pilots has kicked off with advertisements placed on Saturday in The Straits Times and Malaysia's The Star.

The airline spokesman did not say how many pilots will be recruited but hiring of cabin crew will be done later.

The new entity - announced in May - will be run independently of the parent carrier.

SIA already owns about a third of budget carrier Tiger Airways which flies short-haul out of Singapore. Tiger also operates a domestic Australian carrier.

Mr Shukor Yusof of Standard & Poor's Equity Research said the key to the new airline's success will lie in picking the right routes, markets and fares.

For example, fares should be at least 20 to 30 per cent below what SIA charges, he added.

"There is a lot of potential if they can get it right."

He noted that the new entity, which could pose stiff competition to second-tier full-service rivals like Thai Airways and Malaysia Airlines, should appeal to younger and cost-conscious travellers.