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455 total articles
75 total articles
The Singapore Airlines (SIA) Group plans to advance its multi-brand strategy by fully taking over and integrating short-haul LCC Tigerair. The proposed acquisition of the remaining 44% stake in Tigerair is a long overdue move which will improve the group’s overall position, in particular the outlook for long-haul LCC subsidiary Scoot.
SIA should have opted for a bigger role in Tigerair when the LCC was established in 2003, to fly in the following year. SIA also repeatedly opted against taking over Tigerair in recent years although such a move became increasingly inevitable as Tigerair struggled and the launch of Scoot meant that strategically SIA could no longer afford to continue playing a passive role. Better late than never. And it is not too late. The amalgam will give SIA far cleaner operating and partnership options than it had previously.
SIA still faces challenges as competition continues to intensify, both regionally and in key long haul markets. The 6-Nov-2015 offer to take over the remaining stake in Tigerair is just one of several components in a still evolving group strategy aimed at improving SIA’s long-term outlook.
Singapore Airlines (SIA) is approaching a critical juncture with its multi-brand strategy as the group reviews its overall network and pursues new synergies between its four airline brands. The transition of short haul LCC Tigerair from a partially owned affiliate to a majority owned subsidiary has particularly opened up opportunities for medium/long haul LCC subsidiary Scoot and the overall group.
SIA recently began selling Scoot operated flights and is now looking at also forging an interline arrangement with Tigerair. Placing full service and even premium passengers on budget brands was previously unthinkable for SIA but has become a necessary and sensible step as Scoot and Tigerair give the group access to over 20 additional destinations.
SIA’s frequent flyer members can also now accrue and redeem points on Tigerair and Scoot, another recent development that highlights the strategic shift in the group’s multi-brand strategy. SIA is committing to improving the position of its two budget brands, which for now remain unprofitable but are critical components to the group’s long term strategy.
Scoot’s new Guangzhou, Hangzhou and Jeddah routes illustrate evolution of SIA Group network strategy
Medium/long haul low cost carrier Scoot is beginning a new phase as its role within the Singapore Airlines (SIA) Group evolves to include replacing sister carriers on routes to China, India and Saudi Arabia. The new role will see Scoot increase its reliance on feed from other SIA Group carriers, particularly for the Jeddah market.
Of Scoot’s initial 14 destinations, six were launched as new destinations for the group while eight destinations were launched to supplement capacity provided by existing SIA Group brands. But as Scoot quickly expands its fleet from seven to 11 aircraft it is starting to also take over flights operated by other SIA Group carriers on at least three and likely four or five routes.
Scoot is launching Singapore-Hangzhou on 25-Oct-2015, taking over a route previously served by SIA full service regional subsidiary SilkAir. The SIA Group also recently announced that Scoot will take over from Jan-2016 one of two daily Singapore-Guangzhou flights operated by the group's short haul LCC subsidiary Tigerair and from May-2016 the three weekly flights to Jeddah operated by SIA mainline. Scoot is also expected to start serving existing SIA Group destinations in India in 1H2016.
Gulf airlines continue Southeast Asia push. Should Lufthansa & Singapore Airlines respond with a JV?
Lufthansa and Singapore Airlines have steadily been losing market share to the Gulf carriers. The two carriers have tried to use product upgrades to improve their position in the Asia-Europe market but have enlisted little help from potential partners – for example, each other.
Despite their Star Alliance membership, partnership is hardly the core of their relationship. Should they – and more critically, can they? – set aside their differences to combat their greater enemy?
Lufthansa and SIA together account for about 27% of non-stop Southeast Asia-Western Europe seat capacity. But when also counting passengers flown through all connecting points their share of the market is only 13%, according to OAG Traffic Analyser data. Emirates alone has 12% of the market, and once Etihad and Qatar are added, 27% of passengers between Southeast Asia and Western Europe now transits with the three Gulf carriers.
Singapore Airlines reports higher profits but future outlook hinges on Scoot & Tigerair improvements
The Singapore Airlines Group turned a SGD111 million (USD83 million) operating profit for the three months ending 30-Jun-2015 (1QFY2016), marking its best first quarter showing since 2011. An operating profit of SGD108 million (USD81 million) at the parent airline drove the overall result. Full service regional subsidiary SilkAir also remained in the black while the group’s two LCC subsidiaries Tigerair and Scoot, were break-even and incurred a SGD20 million (USD15 million) operating loss respectively.
But the outlook for Tigerair and Scoot should brighten as the two carriers continue to pursue closer cooperation. Scoot should also see a significant improvement after it completes the transition to an all-787 fleet and expands its operation, enabling it to achieve higher economies of scale.
Scoot plans to phase out its last 777 in the current quarter and nearly double the size of its fleet during FY2016 from six to 11 aircraft. The loss reported for Scoot for 1QFY2016 marks the first time SIA has reported financials for the long-haul LCC since it launched in mid-2012.
Myanmar National Airlines (MNA) plans to launch services on the highly competitive Yangon-Singapore route in Aug-2015 as it starts to implement an ambitious international expansion plan. The newly rebranded government-owned carrier took delivery of the first of 10 737-800s in Jun-2015 and plans to operate five international routes by early 2016 as it grows its new narrowbody fleet.
But the airline faces huge challenges as it operates outside the domestic market for the first time in two decades. The Yangon-Singapore market is already experiencing overcapacity and Myanmar-based carriers have struggled to compete against their Singaporean competitors, forcing cutbacks at Myanmar Airways International (MAI) and the withdrawal of Golden Myanmar Airways.
MNA will inevitably face the same challenges in Singapore as other Burmese carriers, particularly given its brand is an unknown in the international market. North Asia, which MNA plans to enter in the coming months, will also be a challenging market.