Launch of new SIA subsidiary Scoot shakes up the LCC market

Singapore Airlines' (SIA) new long-haul low-cost subsidiary Scoot launches services on 04-Jun-2012, shaking up Singapore's already highly competitive LCC market. Scoot becomes the third carrier in Asia's fast-growing long-haul low-cost sector, joining Jetstar and AirAsia X. Scoot also becomes the fourth brand in the SIA Group portfolio, complementing short-haul low-cost carrier Tiger Airways (partially owned by SIA), short-haul full service carrier SilkAir (fully owned by SIA) and the mainline Singapore Airlines full service brand. SIA itself now primarily operates medium and long-haul routes, having handed over in recent years several of its short-haul routes to SilkAir as competition increased with LCCs.

LCCs now account for over 25% of passenger traffic at Singapore Changi Airport. LCCs have driven nearly all the growth at Changi since Tiger, Jetstar Asia and Valuair launched services in 2004 (Valuair was subsequently acquired by Jetstar Asia). The launch of Scoot and the expected expansion of Jetstar's Singapore-based long-haul operation, which currently consists of only three aircraft, should ensure continued growth in Changi LCC traffic even as the country's short-haul LCC market starts to approach saturation after several years of rapid growth.