Have plans to connect more and more destinations: Scoot CCO Leslie Thng

Singapore Airlines (SIA) launched its low-cost arm Scoot in India last week, connecting Chennai and Amritsar to Singapore with its long-to-medium-haul budget carrier. Introducing this service, SIA has become the second-largest airline group to connect maximum number of destinations in the country, next to the national carrier Air India and its subsidiaries. The group also holds 49% stakes in Tata group backed Vistara. From October, Scoot will also commence Singapore-Jaipur services four times a week. Leslie Thng, Chief Commercial Officer of Scoot and sister airline Tigerair spoke to Shahkar Abidi on the sidelines of the launch, sharing details about the business model, future plans as well as the outlook for the Indian market.

Q. The offshoot model (wherein an airline group has many airlines under its umbrella for different market models) has been a failure in many markets as carriers, in order to take on low-cost competitors, have created their own LCCs. For example, Go Fly, which was founded by British Airways in 1998 for catering to passenger demand in the European market. Initially, the new subsidiary airline was quite a success according to the aviation analysts, only to be later sold to a private equity and then to its competitor easyJet, which merged it with its own operations. Similarly, Air Canada Tango of the parent company Air Canada had to be folded back within four years of rolling its operations in 2001. Recently, closer home, Jet Airways dropped its LCC brand Jet Konnect to focus on developing the full service model across its network. One of the possible reasons for high failure rate has been the brand confusion it creates and the subsidiary, at times, also eats into the parent airline's market. What has made SIA expand its operations based on the offshoot model?

A. We believe that having a set of different airlines in our portfolio works for us. As a group, SIA has taken the efforts to keep the four airlines clear and distinct so that it does not create confusion in the minds of the fliers. Our efforts start with the right branding, to the kind of aircraft we are using and other aspects of the airline business. Parent airline SIA is a premium airline for long haul while SilkAir is for short haul. On the other hand, low-cost carriers Tigerair and Scoot are for short haul and long haul respectively. A committee set up by the SIA group plans and takes decisions so that the resources can be shared among the airlines in the most efficient manner. It is about integration and using the available sources to the fullest. The final objective is to get more for the airlines in the group and make them successful.

Q. Are there any chances of overlapping; wherein more than one airline in the group are put up to service on the same route?

A. Normally overlapping is to be avoided. However, still if there is demand for two different business models on a particular route or destination, then we can definitely put two different airlines into use. Hence, we tap on an un-served or under-served market segment on the existing routes. So there is no hard and fast rule with regards to it.

Q. Your parent company SIA used to operate from Amritsar earlier, but was shut later. I believe the reason for shutting down could be due to lack of demand. Why is Scoot starting services from Amritsar now? Is it due to better demand?

A. SIA flew to Amritsar between 2004-2008. It did not fold up the operations due to lack of demand as the load factor was already over 70%. But the fact was that the full-service model did not work there. The LCC model of Scoot is perfectly suited for it, as we have come to believe. Also, the fact that in over past eight years, the overall market has improved. So yes, we are there. At present, Scoot will be flying three times weekly and increase the frequency with an additional service from July, restarting the Singapore-Amritsar route for the SIA group.

Q. Sister airline Tigerair is being replaced by Scoot on Chennai-Singapore sector. Any reason?

A. Replacing Tigerair with Scoot will help in expanding the capacity on the route. Tigerair has A320s in its fleet while Scoot has Boeing B787s which has much higher number of seats. So, more passengers can fly in a single flight which suits the demand at present. Hence, the decision.

Q. You said the SIA group tries to keep all the four airline brand under the umbrella clear and distinct. How is Scoot different from the rest of the airline?

A. Scoot is a low-cost airline operating on medium-to-long-haul flights and is targeted at the young, young-at-heart and those seeking value for money. It is the only airline in the world to fly an all-B787 fleet. We currently have eleven B787 Dreamliners in the fleet and nine more are on order. The airline thus offers spacious and quieter environment with increased cabin moisture and fresher air quality and this has allowed Scoot to differentiate and elevate the low-cost experience for the customers. The passengers can choose to pay only for what matters to them. In addition to that, we have signature products like Scoot-in-silence, whereby the passengers get a child-free cabin, inflight wi-fi connectivity, pre-flight lounge with shower facilities, massage chairs, workstations, etc. Though each of these services are chargeable if the passengers want. But the most striking part of the airline is the super-low price. For example, even if you purchase all the services at Scoot, it would still come about 40% less than the full-service carrier.

Q. Go ahead...

A. On May 16, we formed an alliance of low-cost carriers called as Value Alliance. The platform, which has eight airlines on board at present, allows the passengers to fly to over 160 destinations across the Asia Pacific region offering them seamless connectivity.

Q. SIA has been one of the most premium and successful full-service carriers in the world. Has the performance of Scoot been on the expected lines?

A. Since taking to the skies in June 2012, Scoot has carried over six million passengers. During the FY2015-16 the average passenger load was 83% while the average on-time performance was 87.2% during the same period and our first ever annual profit for FY2015-16 was $29 million.

Q. How big is SIA betting on the India aviation market?

A. According to various studies and expectations, India is one of the fastest growing aviation markets in the world. An International Air Transport Association (IATA) estimate claims that India is projected to be the world's third largest passenger market by 2031 with a total of 367 million passengers by 2034, an extra 266 million annual passengers compared to today. Hence, SIA group is betting big time on Indian aviation market and have plans to connect more and more destinations. Our aim is not just to take more passengers out of India to Singapore and beyond, but also bring more people into India. India is our second biggest market after China where we connect to 24 destinations as compared to 15 in India.