Scoot, Singapore Airlines' LCC subsidiary: a new chapter as it turns five and merges with Tigerair


Singapore Airlines' (SIA) LCC subsidiary Scoot is entering a new phase as it launches long haul services and completes a merger with Tigerair. Scoot has expanded rapidly since its first operations in Jun-2012, including an ASK growth of nearly 50% in the fiscal year ending 31-Mar-2017 (FY2016/17)

Scoot and Tigerair Singapore, which launched operations in 2004, plans to transition to a single operator certificate, single brand and single website in late Jul-2017. Scoot will be the surviving brand while the Tigerair operator's certificate will be retained.

Scoot and Tigerair currently operate a combined fleet of 37 aircraft to 60 destinations, expanding to 40 aircraft and approximately 65 destinations by the end of the current fiscal year in Mar-2018 (FY2017/2018). Capacity growth of 15% is projected for the newly combined airline in FY2017/FY2018, driven primarily by further expansion of the widebody operation as flights to Europe, and likely to Hawaii, are launched, as well as additional services to China.

Scoot has expanded rapidly in the past two years

SIA established Scoot in 2011 as a fully owned medium/long haul low cost subsidiary. Scoot began operations in Jun-2012 with a fleet of 777-200s. The rate of expansion was relatively modest in the initial phase of Scoot’s development, but has accelerated over the past two years following the transition to an all 787 fleet.

Scoot currently operates 14 787s, including eight 787-8s and six 787-9s. Six of these 787s replaced Scoot’s initial fleet of six 777-200s, while eight 787s have been added as growth aircraft since mid 2015. Scoot now serves 23 destinations, 10 of which were launched during an 18-month phase of rapid network expansion in 2HCY2015 and CY2016.

Scoot’s ASKs were up 26% in the fiscal year ending Mar-2016 (FY2015/16) and surged by 49% in the fiscal year ending Mar-2017 (FY2016/17). Passenger traffic was up 28% in FY2015/16, to 2.41 million, and increased by 39% in FY2016/17, to 3.36 million.

Scoot annual ASKs and passenger numbers: FY2014/15 to FY2016/17

Year ending


(in billions)


(in millions)

Mar-2015 8.1706 1.878
Mar-2016 10.2674 2.412
Mar-2017 15.3254 3.357 

Tigerair has not pursued any expansion during the past two years 

Tigerair Singapore commenced operations in 2004 as a short haul LCC partially owned by the SIA Group. SIA took over a majority stake and more active role in Tigerair in late 2014. In early 2016 SIA increased its stake in Tigerair to 100%, leading to the delisting of Tiger Airways Holdings.

Tigerair currently serves 41 destinations with 23 aircraft, including 21 A320s and two A319s. The combined Scoot and Tigerair network consists of 60 destinations, since four of the combined 64 destinations are currently served by both LCCs – Guangzhou, Hong Kong, Singapore and Taipei. (Scoot and Tigerair also both serve Bangkok, but as they operate to different airports in Bangkok this counts as two destinations.)

While Scoot has expanded rapidly, Tigerair’s ASKs and passenger numbers were relatively flat in both FY2015/16 and FY2016/17. Tigerair’s capacity peaked back in FY2013/FY2014, when it flew nearly 12 billion ASKs.

Tigerair cut capacity in FY2014/15 and FY2015/16 when the fleet was trimmed by four aircraft (from 27 to 23) as part of a restructuring initiative. For the past two fiscal years Tigerair Singapore has maintained capacity at the 11.5 billion ASK level. Passenger traffic numbers have been nearly identical in the past three fiscal years, at 5.13 to 5.15 million.

Tigerair Singapore annual ASKs and passenger numbers: FY2012/13 to FY2016/17

Year ending


(in billions)


(in millions)

Mar-2013 9.514 4.393
Mar-2014 11.944 5.068
Mar-2015 11.812 5.140
Mar-2016 11.465 5.128
Mar-2017 11.467 5.146

Widebody growth will again drive double digit capacity growth in FY2017/18

Scoot and Tigerair combined – or Budget Aviation Holdings – carried 8.5 million passengers and flew 26.8 billion ASKs in FY2016/17. Budget Aviation Holdings, the holding company SIA established in early 2016 for Scoot and Tigerair, generated SGD1.388 billion (USD990 million) in revenues in FY2016/17.

Revenues were up 14% compared to FY2015/16, while passenger numbers were up 13% and ASKs were up 23%. As outlined above, Scoot accounted for all the growth at Budget Aviation Holdings in the past fiscal year as Tigerair numbers were flat.

The SIA Group is projecting ASK growth of another 15% for Budget Aviation Holdings in FY2017/18. Almost all the growth will again be driven by the 787 operation, which is now in the process of transitioning from the Scoot to Tigerair operator's certificate.

Scoot-Tigerair fleet to expand by five aircraft in the current fiscal year

Budget Aviation Holdings has already added two 787-8s in FY2017/18, including one delivery in Apr-2017 and one delivery in May-2017.

As CAPA highlighted in a 5-May-2017 analysis report, these are Scoot’s first 787s that are equipped for long haul operations. They are configured with 329 seats – six seats fewer than Scoot’s first six 787-8s – in order to accommodate crew bunks, which are required for long haul flights.

See related report: Singapore Airlines needs to accelerate Scoot expansion in Europe: long haul low cost Part 4

Budget Aviation Holdings plans to take delivery of two more 787-8s in 2HCY2017. These two aircraft will also be delivered in 329-seat long haul configuration. As a result, the new combined Scoot Tigerair will end the current fiscal year with 16 787s, including six 375-seat 787-9s, six 335-seat 787-8s and four 329-seat 787-8s.

The new combined entity will also grow its narrowbody fleet in FY2017/18 but by only one aircraft, resulting in limited capacity growth. The new Scoot will end the year with 24 A320 family aircraft (22 A320s and two A319s), compared to the current fleet of 23 A320 family aircraft.

This fiscal year the airline is taking back three A320s that have been on sublease to India’s Indigo, but is returning two A320s as their leases expire. The net gain of one aircraft will enable very modest capacity growth, while the four additional 787s will account for nearly all of the 15% ASK increase at Budget Aviation Holdings.

Scoot Tigerair to pursue rapid fleet growth in FY2018/19

Narrowbody expansion is expected to accelerate in FY2018/19, when Scoot will take back another eight A320s that are now subleased to Indigo. Tigerair initially subleased 12 A320s to Indigo as part of its 2014 restructuring. One of these aircraft will be returned to the lessor when the sublease expires, while the other 11 will be handed back to the new Scoot by early 2019 as they still have a few years remaining on their original leases.

The SIA Group does not disclose fleet or capacity plans for future years, but even faster growth is expected at the new Scoot in FY2018/19, which will be the first full year under a single air operator's certificate and brand. All eight, or almost all eight of the A320s coming back from Indigo in FY2018/19 are growth aircraft.

Tigerair/Scoot currently does not have any A320s with leases expiring in FY2018/19, although Budget Aviation Holdings could potentially negotiate some early returns, which would be sensible because adding eight A320s in a single year could result in overcapacity.

In FY2018/19 Scoot is also slated to take delivery of the last four 787s remaining from the original 20 aircraft order. As a result, the overall Scoot fleet could grow by as many as 12 aircraft in FY2018/19 – compared to the net growth of five aircraft in the current fiscal year.  

A320neos are delayed until at least 2019 

Tigerair/Scoot also has 39 A320neos on order. These aircraft were originally ordered by Tigerair in 2014 for delivery from CY2018, but the first delivery has been delayed until at least CY2019.

Delaying the delivery of the A320neo makes sense as Scoot already has too many deliveries (and at this point no scheduled returns) in FY2018/19. Scoot does not have any more 787 commitments in FY2019/20, and therefore should be able to digest capacity increases generated by A320neos more easily.

Currently there are also no scheduled A320ceo lease returns for FY2019/20 – although early returns could potentially be negotiated. Most of the Tigerair A320 fleet does not come up for lease return for several years as they reach the 12 years old mark.

According to the CAPA Fleet Database, the current Tigerair fleet consists of two aircraft that were manufactured in early 2006 (these are the aircraft slated to be returned in the current fiscal year), while the rest of the fleet were manufactured in 2009 to 2013 – and therefore will come up for lease expiry in 2021 to 2025. The aircraft subleased to Indigo were built in 2011 and 2012, and therefore will not come up for lease expiry until 2023 and 2024.

Scoot plans to transition eventually to an all A320neo and 787 fleet. The last of the 39 A320neos is expected to be delivered in the fiscal year ending Mar-2026 (FY2025/26), which is the same year the lease on the youngest of the A320ceos expires. Tigerair’s youngest A320ceo was delivered in Dec-2013, and therefore is slated to be returned in Dec-2025. 

Scoot has flexibility to expand 787 fleet or use A320neos to operate longer routes

Since the A320neo has improved range, Scoot will have the option of using its first batch of A320neos to replace the 787s on some routes, which would free up 787s for expansion in other markets.

Scoot currently does have any 787 orders beyond FY2018/19. However, the SIA Group has stated it has the flexibility to change some of its 787-10 orders (which are intended for the parent airline) to 787-8s or 787-9s for Scoot, should it decide to continue expanding Scoot’s widebody fleet.

Budget Aviation Holdings fleet summary: as of Jun-2017

Aircraft In service On order
Airbus A319-100 2 0
Airbus A320-200 21 0
Airbus A320-200neo 0 39
Boeing 787-8 8 2
Boeing 787-9 6 4
Total: 37

Scoot to add capacity to China in FY2017/18

While four of the five aircraft Scoot is adding in FY2017/18 are long haul configured 787s, only a portion of the growth planned for the current fiscal year will be in the long haul market. Scoot is planning a combination of short, medium and long haul growth.

Scoot is now considering the transition of some of Tigerair’s longer routes from A320s to 787s, which would free up A320s for regional expansion. Some of the routes that will likely be upgauged from A320s to 787s are to China.

Budget Aviation Holdings currently serves 16 destinations in mainland China, including nine that are served only by Tigerair, six that are served only by Scoot, and one by both airlines. Scoot and Tigerair combined have nearly 20,000 weekly seats to mainland China.

China has been Singapore’s fastest growing market over the past two years and demand continues to expand rapidly, providing opportunities to add capacity and launch new destinations. LCCs are particularly well positioned for this growth as most of the growth in the Singapore-China market consist of Chinese price sensitive leisure passengers from secondary cities.

See related report: Singapore Changi Airport: China visitor numbers reinvigorate passenger growth

Tigerair and Scoot aim to complete their merger in late Jul-2017

Scoot has been waiting to complete the transition to a single operator's certificate before upgauging China routes from A320s to 787s. Under the current structure of two operating certificates for Budget Aviation Holdings, route transfers in China are difficult because China does not allow slot transfers between two airlines.

Once the Scoot and Tigerair merger is completed, the airline will be able to change gauge on China routes – and in some other markets – without risking the loss of slots.  

Budget Aviation Holdings confirmed in a 15-Jun-2017 announcement that Tigerair and Scoot will complete the transition to a single brand, website and operator's certificate on 25-Jul-2017. All flights and check-in counters will be branded Scoot from 25-Jul-2017 but it will take approximately another year until the entire Tigerair fleet is repainted in Scoot's livery.

Tigerair's AOC will be retained 

The Tigerair operator's certificate and TR code will be maintained over the Scoot operator's certificate and TZ code. However, Tigerair will adopt the Scoot brand.

As CAPA has previously outlined, maintaining the Tigerair operator's certificate makes it easier from a regulatory standpoint because Tigerair serves more countries than Scoot.

See related report: Tigerair Singapore 2017 outlook: fleet expansion resumes as brand disappears, transit traffic grows

By keeping the Tigerair operating certificate, Budget Aviation Holdings only needs to secure new foreign air carrier permits from four countries – Australia, Japan, Saudi Arabia and South Korea.  If the Scoot operating certificate were to be kept, Budget Aviation Holdings would have needed to secure new permits from eight countries: Bangladesh, IndonesiaMacauMalaysia, the Maldives, Myanmar, Philippines and Vietnam. Some of these countries can be difficult when it comes to applying for new permits and swapping slots between airlines.

In Feb-2017 Budget Aviation Holdings moved two of Scoot’s 787s to the Tigerair operator's certificate – although these aircraft continue to be operated by Scoot crews under a wet lease arrangement. Scoot’s remaining fleet of 12 787s will be transferred over to the Tigerair operator's certificate by the 25-Jul-2017 cutover.

In the few months following the cutover Scoot is planning to upgauge and downgauge several existing routes, enabling it to match capacity better with demand. Scoot is also considering the launch of new destinations within Asia in the second half of the current fiscal year, including in mainland China, and new long haul destinations outside Asia. 

Honolulu likely to be launched within the next year

So far Scoot has only announced one new destination for FY2017/18 – Athens, which is launching on 20-Jun-2017. However, Scoot is planning to launch another two or three long haul destinations using its new subfleet of four long haul equipped 329-seat 787-8s.

In May-2017 Scoot also applied to US authorities for approval to launch services to Hawaii on a Singapore-Osaka-Honolulu routing. Scoot does not necessarily need to use the long haul equipped 787s for Honolulu, since the Osaka-Honolulu sector is less than 10 hours and therefore does not require crew bunks. However, depending on how Scoot schedules the Singapore-Osaka-Honolulu route, including the crew layover times, it may end up requiring crew bunks for this route.

Scoot plans to set a launch date for services to Honolulu after it secures all the required approvals from US authorities. The process of securing US approvals for a foreign airline that has never served the US can be tedious. Scoot’s management team is hoping it will get the green light from US authorities by the end of calendar 2017, which would enable it to launch services to Honolulu at the end of FY2017/18, or in the first part of FY2018/19.

Between Osaka and Honolulu Scoot will compete against AirAsia X, which is launching four weekly flights on a Kuala Lumpur-Osaka-Honolulu routing on 28-Jun-2017. AirAsia X is relying mainly on stimulating local demand from Japanese travellers for the Osaka-Honolulu leg – a relatively large route not currently served by any LCCs – as there is limited local demand between Malaysia and Hawaii.

See related report: AirAsia X to become the ninth Asia Pacific low cost airline serving the US, and the third in Hawaii

Scoot is hoping to stimulate Singaporeans to travel to Hawaii but its Osaka-Honolulu traffic will also likely consist almost entirely of Japanese leisure passengers heading to Hawaii.

New Hawaii service enables Scoot to launch Singapore-Osaka nonstops

Scoot should be able to fill the Singapore-Osaka leg of the new Singapore-Osaka-Honolulu route with local Singapore-Japan traffic. Singapore-Japan is a large and growing market, but Scoot currently does not operate any nonstop flights between Singapore and Japan. Scoot currently serves Osaka via Bangkok and Kaohsiung with mostly Bangkok-Osaka and Kaohsiung-Osaka traffic, consisting of local passengers rather than passengers heading to or from Singapore.

Scoot also only serves Tokyo via Bangkok and Taipei. Scoot is unable to operate from Tokyo to Honolulu due to bilateral constraints and is therefore unlikely to launch Tokyo-Singapore nonstops. Scoot also serves a third destination in Japan, Sapporo, via Taipei, but the Sapporo market is probably too small and seasonal to support nonstop flights from Singapore on a year-round basis.

The Singapore-Japan air services agreement permits Singapore carriers to operate beyond service to Honolulu from any Japanese city except Tokyo. The Malaysia-Japan air services agreement has the same limitations – hence AirAsia X’s decision to serve Honolulu from Osaka rather than Tokyo.

Scoot enters new phase as Tigerair merger is completed and long haul is launched

Scoot does not intend to serve Honolulu or any of its long haul routes daily. Athens will be served with two to four weekly flights, depending on the season. It is likely that Honolulu will initially be served with three or four weekly flights.

Scoot is trying to adopt a relatively conservative approach to expansion – particularly so, for an LCC. While the newly combined Scoot/Tigerair will grow capacity over the next few years at an annual double digit rate, the rate of expansion will not be as fast as for other LCCs in the region. A large proportion of the additional capacity will also be allocated to existing markets through additional frequencies and upgauging from A320s to 787s. New markets will be launched but will be relatively small in number, and new long haul routes will initially be served with limited frequencies, therefore minimising the risk.

However, even with this relatively conservative pace of expansion, Scoot has a lot on its plate and faces challenging market conditions. Operating profits at Budget Aviation Holdings declined by over 50% in the most recent quarter ending 31-Mar-2017, and profits will likely be reduced in FY2017/18.

The completion of the Scoot-Tigerair merger will unlock new synergies, but yields are under pressure due to intensifying competition and overcapacity in several markets, potentially wiping out the revenue and cost gains from the merger. Scoot is also inheriting a Tigerair A320 fleet with relatively high lease costs, and an order book which could prove to be overambitious. Meawhile, the launch of long haul routes is always an expensive and somewhat risky proposition.

Scoot is at a critical phase at begins its sixth year of operations. The LCC has come a long way in its first five years, establishing itself as a sizeable player and unlocking a new phase of growth at the bottom end of the market for the SIA Group.

A key feature will be for the merged LCC's network to become better integrated into the overall SIA Group system. At present the Group is not leveraging its multiple destination capability effectively. Improving its interline and codeshare potential among its different brands will benefit the Group overall, with valuable flow on for Scoot.

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