Home' Asian Aviation : AAV_Oct 2012 Contents AsianAviation | OCTOBE R 2012 23
But although Scoot is clearly looking for
connectivity, Tiger is far from being a shoe in. "All
airlines are essentially operating under one roof,
serving 220 cities. There is fantastic connectivity at
Changi - we're seeing it ourselves."
The issue is whether the advantages of more
formal connectivity arrangements outweigh the
disadvantages of a more formal arrangement -
especially given the DIY connecting possibilities.
"How much more convenient will it be to facilitate
it?" is the issue, says Wilson. "Airlines sell interline
all the time - the difference with two LCCs outside
the same family [Tiger is only an associate of the
SIA Group] is you've got issues of liability, risk and
complexity. Whilst not insurmountable, they are
contrary to the operating model of an LCC," he
"You can certainly cooperate while being a point-
to-point carrier, and cross market. You just need to
be clear to people that there's no responsibility [for
SIA Group sister company Silkair is also a possible
connectivity partner. "Everyone's in the mix - there
are lot of European and Indian carriers that serve
Singapore and don't continue on, and in some cases
don't have a relationship to continue on to Australia
or China," notes Wilson. "We have no bias."
The different fare structures may help make the
connectivity work - Scoot has three fares in economy
- fly, flybag and flybageat. "We're an LCC but we
can carry a hybrid passenger. Which is why the
connectivity over T2 is good for us," says Wilson.
A key issue for long-haul haul low-cost is the cost
differential compared to the mainline product. How
is Scoot achieving this? "I'm going to plagiarise Air
New Zealand and say density, disaggregation, and
efficiency," Wilson says.
"We strip out everything in terms of onboard
product and empower consume to select the
things they really want - it's unbundled and offered
separately," Wilson explains.
"The argument has been made that you're charging
back that you're charging for things that used to be
free and the net price is the same, but that's not
really the case. If you're not stocking meals based
on what historical utilisation says passengers will pay
for, there are further cost savings rather than just less
meals to be transported," he says.
"We've been able to take out one-and-half galleys,
which is a substantial weight and also a substantial
space saving," notes Wilson.
The aircraft have 370 economy seats and 32
Scootbiz seats, giving a total of 402. This is around
40% higher seat density than when the aircraft were
with SIA, Wilson says. Cabin staff to passenger
ratios, meanwhile, are around 40% higher than SIA.
Scootbiz, which Wilson compares to a mainline
premium economy product minus the frequent flyer
points, has been performing "in line with capacity," he
says, "which is encouraging".
The configuration in economy is 3x4x3 - the same
as Emirates, Air New Zealand and KLM, Wilson
notes. Seat pitch is 31", but with extra space thanks
to the fact that the seat-back TV has been taken out.
Altogether, onboard weight savings come in at 7%
less than a standard SIA configuration.
In terms of fleet utilisation, Wilson says Scoot's
is about 45% better than SIA. "LCCs can trade off
the convenience of a departure time with a very low
fare. A carrier focussed on the corporate market has
relatively fixed windows. There's nothing wrong with
that - it's just different philosophies."
There are a number of areas ranging from fuel
hedging to auditing where Scoot takes advantage of
the group's know how and ability, while paying a fee.
But Scoot is not obliged to use the parent's services.
"If an external provider provides better value we're
free to take it - and we do. There are some areas
where you can't rely on the company's economy of
scale. For example SIA uses Amadeus Altea which
is designed for a carrier with a large fleet. It's just not
for us." Scoot uses the Navitaire inventory system.
Will Scoot be a success? While the jury is still
out on low-cost medium-to-long haul, there is clearly
a case to be heard and it appears to be gaining
popularity. The biggest challenge may well be fuel,
which is a huge part of the cost base - more than
50% at current fuel prices.
"Once you squeeze the rest of the costs out
the proportion spent on fuel goes up dramatically.
So where the fuel price goes, so do we," says
Wilson. "At this juncture, at this fuel price we're not
uncomfortable with where we are."
He adds: "It means that we're more volatile - so the
higher fuel goes, the more volatile our performance.
We're burning more fuel, but carrying more passengers
for that fuel. We're not immediately disadvantaged in
that respect. There's just less of a cushion."
Clearly this is a challenging environment to be
setting up a new carrier of any ilk, but Scoot is clearly
defined by hard-nosed business cases and while it
can't control fuel prices it is making the most of what
it can control. Load factors have been 82% so far,
with most seats sold over the web as the travel agent
side of things is still gearing up.
With little marketing budget and very much in the
start-up phase, Scoot has had remarkable success
in the social media field, which is a key marketing
tool. In July, flyscoot.com was number one brand in
Singapore by average engagement rate and daily
page engagement rate, according to Socialbakers
Media Report. It was also ranked second in terms of
socially devoted brands, which measures responses
Scootitude in action! And one of many useful tools
in the quest to make Scoot a key weapon in the SIA
"We have no preference between primary or secondary airports. There are two
questions with airports - one what is the demand and two, what is the cost."
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