Scoot Head of Sales and Distribution Trevor Spinks discusses the airline’s growing long haul network and the overall expansion plan for 2018. Scoot launched its first true long-haul destination, Athens, in Jun-2017 and added Honolulu in Dec-2017. Scoot is launching Berlin in Jun-2018 and is planning “a couple more” new long-haul routes. Scoot is also expanding its already extensive network China in Jul-2018 with the launch of services to Nanchang. Mr Spinks also discusses Scoot’s takeover of routes from other Singapore Airlines Group airlines and how the LCC is starting to benefit from codeshare traffic within the group.
Trevor SpinksSales for Berlin are going very, very well. The sales we've seen from Point of Sale Singapore, the sales we've seen from point of sale from Germany as well, are exactly where we expect them to be in terms of the load curve. We've still got several months to sell as well. So the flight is on the 20th of June, so we're very happy in terms of the yields we're getting this far out before the first flights.
So, very roughly I'm hoping for probably 40% of the traffic to come from point of sale Germany, probably about 50% from point of sale Singapore, and 10% from other routes, from other POS, probably mainly led by Australia.
So Athens is a really interesting one. We took this one over from Singapore Airlines who'd been doing it for a few years. What we did, we got the capacity right straightaway. We also launched it in peak season, so it was always going to get off to a great start, and we did that for a week. We brought the capacity down back to two a week over the weaker winter months. So again we were happy for it to cover variable costs in the weaker months. Christmas obviously sort of gave it a boost, and Chinese New Year a small boost a well. But coming up to almost a year's worth of operation, we're quite happy with where Athens is, in its first year, already.
Of course two a week in the low months is not ideal. But at least we started, and we've done it one year already, on two a week, and the performance we've seen already, we're already considering sort of increasing it to maybe three a week, maybe four a week the year after that. So like with a lot of airlines, we'll start on a part weekly service, we won't lose our shirt in terms of costs or profitability, but if it's covering the costs, and it's improving day by day, and people get more used to it, we'd look at increasing this route, eventually hopefully within a few years to be a daily service.
So there's quite a lot of free traffic from Australia, as you imagine. It's around about the 15% mark or so, and the rest is almost half split between Point of Sale Singapore and Point of Sale Athens. A lot of it comes from on the online site of the sales channels as well.
It's definitely part of the longer plan, I mean it's been around for five years, and we've been a long haul, low cost carrier, but for the first few years we only did Melbourne and Sydney, which is only eight hours, and is that really long haul question mark. So Athens was our first long haul, quickly followed by Honolulu, and now Berlin. So we've got three properly, truly long haul routes within about a year. So there's a couple more in the planning stages at the moment as well, and we also want to increase the frequency on the routes that we've already started, which like you mentioned previously, two a week for Athens. We've been looking at increasing that for up to three, maybe four a week in the off seasons as well.
We're looking at Europe. I can't say too much as well, but we're looking at Europe. We're looking at a whole heap of places across the globe as well. So think typically sort of 12 to sort of 16 hours or something similar. The aircraft can easily sort of make that. So it's too early to say what we're going to be doing, but we're looking at several other points. I think maybe one or two long haul points per year being announced.
We're trying to try and utilise them as quickly as possible, but not to lose our shirts in terms of utilising them so heavily, in say shoulder months or something similar, where you're flying them for high utilisation, but struggling to cover costs.
We started this one just before Christmas. So we had the Christmas traffic in the peak, so it got off to a great start. We were never expecting much from Point of Sale Singapore, it's around about the 10 to 15 percentage mark or something similar. Everybody knows that the Hawaii market is Japanese driven. We're seeing roughly 60 to 70% of our sales coming from Point of Sale Japan. In some weeks and some months it goes up even higher as well. It's still relatively small numbers from Point of Sale US, but we haven't got a GSA set up in the US, we're not really pushing marketing on the US side. So we rely on the OTAs really, selling from the US Point of Sale.
So we've got to get this on sale, just getting ourselves over to Honolulu. Honolulu themselves don't really have sort of full established GSAs to work with anyway. So it's in that offline market, it's quite a hard thing to sort of cover. So initially it's about the online market as well, but of course we'd be looking at other areas.
So obviously we've got Berlin that starts on the 20th of June. That's going to utilise one of the Dreamliners pretty heavily. It's a four week Germany route. Then towards the end of the year we've got some of the first Neos arriving. In between there we're moving a lot of capacity around. The Singapore Airlines Group is now really working and working like a group, so we're sometimes shifting capacity around in the group as well, to make sure that some of the routes that are sort of more low cost based or maybe sort of premium cost based as well, get the capacity that they need as well.
The value alliance is always going to be there. Having the value alliance between sort of eight, now seven airlines, and the CEOs all have to have the buy-in as well. All low cost airlines have a lot of things going on at the same time, the value alliance being one of them. Scoot's now got its eye on talking firmly on interlining co-chair with a partner company, Singapore Airlines also. So the value alliance is still there, it's still very important. Booking to come in and bookings are increasing by significant percentages year on year, but they're still relatively low. But again it's somewhere that's going to get another sort of injection in terms of time, and effort, and money in the next couple of months. So keep your eye out for that one. It's not done and dusted, it's going to get a lot more injection going forwards.
The Jeddah route, sort of move from Singapore Airlines to Scooter, ooh crikey, a good two years ago or so now, that was really led by sort of economies of scale. It's a route that was very much, it's not a business class route, so Scoot had the better dynamics, the better aircraft for the Jeddah routes, so that's why we took that route over, and we've been very happy with the performance on that once since. In terms of the cross-selling, in terms of the co-chairs, it's still very early days. We've done the first couple of phases, it's Singapore Airlines selling on to Scoot, and we've had some really good reactions from the Point of Sale Australia side of things, especially. Whether that's flying a Scoot sector or a Singapore Airlines sector up to Singapore and then onbound to Europe or something similar. So, it's too early to sort of say which are the big markets that are really effecting us, from Point of Sale Singapore, but it's had a really good effect from Point of Sale Australia already.
It's just a case of sort of just looking at the whole network now. There's actually sort of a proper group where each of the three parts of the company come together and they talk about the groups, and the profitability, and who should maybe sort of be injecting capacity or changing capacity. So those decisions will be made as a group. So it's not Singapore Airlines pushing the button saying you have to do that, or Silk saying that, or Scott saying we want to do this. It's then some of these markets are much more driven by the low cost side of things, by the lower GDP sort of markets as well, so that's why we're just moving them to try and sort of make sure that we've got the right capacity in the right markets, when it's supposed to be there.
So the only big channels we don't do are the obvious big metro cities as well, but this will make us, I think it's the 20th China city as well. So we've been ... A big focus of our network is China, and it has been since the very start of Scoot's network as well, so this new route makes it the 20th network point as well. So we're working our way across and slowly sort of making ourselves get further and further into China a well, but China works very well for us. We've got our distribution strategies working very well there. We now have the online works, we know that China's very much driven by group traffic, and we've got a lot of the investment into sort of group booking technology as well, to make sure that we're actually giving the people who want to book the option to book in the way they want to.
I've enjoyed some of the aircraft information, where you talk to Bombardier and the aircraft types. What's really interesting and what people don't know yet, is how the Neos are really going to change some of the ballparks. So, typically the 320s, you're really pushing them, when you're pushing them sort of five hours, and the economies of scale, and the cost per seat really sort of just start to become not worthwhile, but the Neos are going to be a game-changer. So all of a sudden five hours becomes very nice kind of middle ground. Six hours, seven hours, eight hours, is that the new kind of norm for these aircraft, or does that push them a bit more. So it's learning a bit more about what's the sweet spot for these new aircraft that are going to be delivered soon.
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