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November 2, 2011 / oneworld82

The arrival of Scoot

Singapore Airlines sensed that the wave of low-fare carriers that is sweeping South-Eastern Asia was driving traffic away from itself and its wholly-owned regional subsidiary Silk Air. Hence, it decided to react. As this article shows, SA will soon launch Scoot, a low fare airline aimed at taking on Air Asia, Tiger Airways, Cebu Pacific et al. in their home turf.

Scoot will be owned by Singapore Airlines but operated independently. No brand association between the parent airline and low-cost subsidiary will be made, in order not to confuse customers who may be associating a premium airline to a LFA.

Scoot represents certainly a good opportunity for SA. SE Asia is a fast-growing market when it comes to low-fares airlines. A growing population, a growing middle-class, and a growing economy are making the region the fastest growing airline markets in terms of passenger flown, together with China and India. The enormous success of Air Asia – chosen as best low-fare carrier i nthe World several times by SkyTrax – has drawn customers away from Malaysia Airlines and Singapore Airlines on short- and medium-haul routes, while carriers like JetStar are stealing away long-haul customers on routes to China, Japan, and Australia.

Yet, challenges linger on the background as well. Think about capital investment, uncertain macro-economic conditions, and strong competition. To offset all this, Singapore’s central location should help Scoot be successful, mimicking the results obtained by Tiger Airways.

Time will tell whether Sott will help Singapore Airlines lift its shrinking profit margin.

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