SIA unveils long-haul budget carrierSingapore - Singapore Airlines Tuesday launched a long-haul budget carrier that will fly to Australia and China with longer-term ambitions to reach Europe as the region's market for no-frills travel booms.
Scoot will begin flying from mid-2012 with a fleet of four Boeing B777-200 aircraft bought from parent company SIA and will fly to Australasia, China and other destinations. Specific cities will be announced over the coming months.
Top 20 Defense Contractor Assessments
Company executives expect Scoot to tap into growing demand for low-cost travel over longer distances as most of Asia's budget carriers cover short-haul routes.
The airline will charge up to 40 percent less than regular carriers, and plans to have 14 planes by 2016, with longer-term plans to fly to India, Europe, Africa and the Middle East.
In Asia, Scoot is expected to compete directly with AirAsia X -- the long-haul affiliate of Malaysia budget carrier AirAsia of which British tycoon Richard Branson's Virgin Group owns a 20 percent stake -- as well as Australian carrier Qantas' low-cost subsidiary Jetstar Airways.
AirAsia X currently flies to a variety of destinations including London, Taipei, Tehran, Paris, Seoul, Tokyo and a number of cities in China and India.
AirAsia X has already outlived several low-cost, long-haul airlines that have gone bust in recent times including Canada's Zoom, British-based Flyglobespan and Hong Kong carrier Oasis.
In an interview with AFP in June, AirAsia X Chief Executive Azran Osman-Ali said the airline was set on a major expansion mode in Asia Pacific and the Middle East.
An AirAsia X spokeswoman told AFP Tuesday the carrier will launch services from Kuala Lumpur to Osaka on November 30 as part of its expansion plans.
A spokeswoman for Jetstar in Singapore said the airline was "continuing to look into long-haul services" but did not give details.
Scoot's Chief Executive Campbell Wilson said the new airline will aim to be different, starting with its name.
It is "not an everyday airline name because this is not an everyday airline," Wilson told a news conference. "We are very purely a no-frills model."
Wilson told AFP after the news conference that Scoot is unable to fly to the United States initially because of the B777-200's limitations but he was not ruling out serving the US market in the future.
While Scoot is a wholly owned SIA subsidiary, it is independently managed and will focus on the medium- and long-haul budget segment which Wilson said is a fast-growing market.
"Taking over the routes of SIA is not the intention of Scoot. We're targeting a new, growing market... SIA will continue to grow in its own way and we will target a different niche."
Jonathan Galaviz, an economist who follows Asia's travel and leisure market, said the budget carrier segment could still grow in Asia but the jury was out on whether long-haul, low-fare carriers had staying power.
"One must question whether the long-haul budget carrier model will be sustainable in the long-run as legacy carriers will not stand idle in providing strategic pricing responses," he added.
"There is certainly consumer demand for cheaper long-haul fares, but the operational economics of this type of service are very different from historical budget carriers," he told AFP.
"Ultimately, consumers have to decide whether they are willing to have less comfort and amenities on long-haul service flights -- it's a question that will soon be answered."
SIA already has a short-haul, full-service unit called SilkAir, which travels to tourist destinations in Asia and has a stake in Asian budget carrier Tiger Airways.
by Philip Lim
(c) 2011 AFP