Singapore Airlines Pursues Rapid Expansion In The US With A350-900ULR

Transcript

Campbell Wilson:Between October and December, we launched 20 nonstop flights to the US— New York, San Francisco, Los Angeles— all looking good in terms of advance bookings, particularly in business class. New York is the first cab off the rank, and since launch, it's proven very popular. To take out that disruption of a transit, you know, a couple hours before landing, the transit itself, and a couple of hours after landing makes such a difference to the travel experience and arrive in such better shape. I've done it twice in the last couple of weeks, and I can tell you that I wouldn't do it any other way now. I mean, clearly the reason why we are now able to operate that flight is the advance in aircraft technology. With the A340-500 we operated previously, it was a 1990s technology, 4-engine aircraft. Built and designed when fuel was $20 a barrel didn't make so much sense when it was $120 a barrel. This aircraft is now fit for purpose, has the latest generation SIA products on board. So it really— it is the right time to put it back into the market because the challenge with that route was never demand. It was aircraft efficiency. And now with the right aircraft, we're very confident it will do well. Well, the more overall seats is a good thing because obviously it allows you more revenue-earning opportunity. The more aircraft gives us opportunities to expand the network perhaps at some future point in time. We've already announced the launch of Seattle later next year with 10 flights into Los Angeles, 10 flights into San Francisco, and daily flights into New York, all nonstop from Singapore. It's a fair old increase of capacity into the US. Singapore is a tech hub, but it's a financial hub. Seattle has obviously a tech community with Amazon and Microsoft, has an industrial base with Boeing and others. So we think that the market has developed such that there's a corporate market. Clearly there's a leisure market. The Cascades and the greater Washington area, including British Columbia, are a great catchment, great destination. So we think that the population, the commercial market, the leisure market, are all about the right size for us to justify a flight into that region. Yeah, so we have a relationship, have had a relationship for some years with Alaska Airlines. It might not seem it to the layperson, but the great circle distance means that the first US point, or mainland US point, that you touch is Seattle. And with the Alaska Airlines partnership and the easy transfer at Sea-Tac Airport, it means that you can access interior US much faster and much easier through Seattle than, than through some of the other US points that we serve. Yeah, I mean, Singapore is a hub. Singapore Airlines is a network carrier. We've spent quite a lot of time over the past few years building that network, firstly developing SilkAir into a sizable unit and now in the process of integrating that with Singapore Airlines so that both will be operated under the same Singapore Airlines brand with a consistent onboard product. And then obviously the Scoot low-cost network, which was built by Scoot and then integrated into the old Tiger network to give 62-odd destinations on the low-cost side of the house, and together 138 destinations between the full-service and low-cost proposition. You know, that confers a network benefit and a network advantage, and we fully use that in supporting not just the ULR services to the USA, but the network generally. Clearly, I mean, that was the rationale for flying nonstop to the US in the first place back in 2003, 2004 when we first started. And the only reason we stopped it was because of the economics of operating the route with an older technology aircraft. So when we ceased flying, we challenged Airbus to build an aircraft that could do that route economically. And when they did, we procured it and we've deployed it. So, yeah, strategically, it's important for us to have that nonstop service to the US because it builds the Singapore connectivity and it also improves the ability for us to sell into interior US. So when Scoot started, it was clearly a separate entity, a separate brand. We didn't want brand confusion. We wanted to ensure that the low-cost operation was off to a good start without the risk of being— its model being polluted. As time went on and its brand proposition and service quality and reliability became known, there was less fear about cross-selling across the 2 networks. From a technical perspective, there's a few challenges in integrating an Altair and a Navitaire-based airline. We are progressively overcoming them. Obviously, the field sales force need to understand the product differences and communicate them clearly to travel agents and customers, and that's a gradual process, bearing in mind that both the Scoot and the Singapore Airlines sales force were very steeped in doing things their own way for their own brand, and so it's a reeducation of our own internal people as much as it is external. But it's coming together and we're seeing very good volumes being sold on to Scoot by the Singapore Airlines network. There are some markets where we're seeing the reverse happen, but the growth rate is quite considerable, albeit small from a total percentage of our overall carriage. But clearly, clearly, a 138-city network effectively selling across each other is of great commercial value to the business. And so it's something we're continually working towards. Well, I mean, it is important, obviously. Today's customer wants to get from, from A to B. And if part of that journey is full service and part of that is low cost, that's what the consumer is asking for in many cases. And so it's up to us to ensure we can facilitate that. But yeah, I mean, the Scoot proposition will remain low cost. It is designed to fulfill that segment of the market. But it was also designed to be scalable such that people could add baggage, add meal, add in-flight entertainment, add Wi-Fi on board such that the total experience became a de facto full-service one if people chose. And so at that upper end with all the inclusions, it is, at least from a hard attributes perspective, not too dissimilar than a Singapore Airlines or SilkAir proposition. Obviously the service model is different. But from a basic attributes perspective, at least in economy class, there is a level of parity that wouldn't otherwise be obvious if you just compared the base product versus the base product. It's 62 destinations. It wasn't that long ago in 2012 when we had one aircraft and one destination, at least for widebody Scoot. Clearly, there's still a strong growth story for Low-cost travel in Asia. It's a fast-growing region. The traveling public is growing faster than GDP. So I think, yeah, the rate of growth of Scoot should continue to be buoyant. Obviously, that's not my area of expertise anymore and probably a question best asked to them, but clearly it's an important part of the Singapore Airlines Group.

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