Singapore Airlines interline boosts Scoot’s prospects but growth & profits are still two years away

The partnerships strategy at Singapore's new low-cost long-haul carrier Scoot has emerged, with an interline agreement covering flights operated by sister full-service carriers Singapore Airlines (SIA) and SilkAir. Scoot - which also began a partnership with short-haul LCC affiliate Tiger Airways in Oct-2012 and will soon add interlines with Tiger's subsidiaries in Australia, Indonesia and the Philippines - expects to add several airline partners from outside the SIA Group during 2013.

The partnerships are crucial as Scoot needs a virtual network and can't entirely rely on point-to-point traffic to fill its 402-seat Boeing 777s. While Scoot has succeeded in filling up its initial fleet of four 777-200s, recording a load factor of nearly 80% in its first seven months of operation, the carrier is slowing down expansion until it receives more efficient Boeing 787s.

Scoot will now only take one additional 777 in 2013 and will not expand its fleet beyond five aircraft until 2015. More rapid expansion is expected in 2016 to 2018 with Scoot's fleet growing to 20 787s by the end of 2018. The partnerships forged now are crucial for providing the traffic base and yields needed to ultimately support a 20-aircraft operation and achieve sustained long-term profitability.