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Scoot Part 1: New phase of expansion after completing Tigerair merger, to double fleet in five years

Singapore Airlines (SIA) LCC subsidiary Scoot is launching five new destinations as part of the first phase of expansion following the completion of its merger with Tigerair. Scoot also plans to add capacity and adjust schedules to several of its existing 60 destinations in a bid to improve connectivity and grow transit traffic.

Scoot plans to add Harbin, Honolulu, Kuching and Palembang in 4Q2017 followed by Kuantan in early 2018. Scoot expects to announce more new destinations over the next several months, including a second destination in Europe and additional destinations in India.

Rapid network expansion and increased capacity to most of its existing destinations is necessary to meet an ambitious plan to double the fleet over the next five years. Scoot is planning to add 12 aircraft, six 787s and six A320s over the next two years and nearly 40 aircraft, primarily A320s, over the next five years.

Scoot and Tigerair complete merger

Scoot and Tigerair completed a merger on 25-Jul-2017, resulting in a single brand (Scoot) and a single operator certificate (Tigerair). The SIA Group initially unveiled plans in Nov-2016 to merge Scoot and Tigerair by the end of 2017.

See related reports:

The two airlines have been operating under a single management team and company, Budget Aviation Holdings, since early 2016. Scoot has been wholly owned by the SIA Group since it launched services in Jun-2012 while SIA Group took over full ownership and delisted Tiger Airways Holdings in early 2016.

See related reports:

Tigerair Singapore commenced operations in 2004 and has always operated A320 family aircraft. Scoot has always been an all widebody operator, initially operating 777-200s before transitioning to 787s. Of the 60 destinations (excluding Singapore) served by the newly merged airline, 20 are served entirely with 787s, 37 are served with A320 family aircraft and three are served with a combination of A320s and 787s.

Scoot to grow fleet from 37 to 49 aircraft by mid 2019

The merged airline (the new Scoot) currently operates eight 787-8s, six 787-9s, 21 A320s and two A319. The A319s and A320s are in all economy configuration while the 787s are in two class configuration.

Scoot has another six 787s on order, including two -8s and four -9s, and commitments for 39 A320neos. The airline also has 12 A320ceos that are now subleased to Indian LCC IndiGo. These aircraft are all coming off sublease by early 2019 – and nearly all of them will be added back to the Scoot operating fleet.

Scoot fleet summary: as of 26-Jul-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 45

Scoot plans to expand its fleet over the next two years from 37 to 49 aircraft. This includes the last six 787 deliveries for a total of 20 787s and a net gain of six A320s for a total of 29 A320 family aircraft (27 A320s and two A319s).

Scoot to add six 787s by mid 2018

Under the current 787 delivery schedule, Scoot will take one 787-8 in Aug-2017, another 787-8 in Dec-2017, two 787-9s in 2018 and two 787-9s in 1H2018.

The two additional 787-8s will be in 329-seat two class configuration while the four additional 787-9s will be in 375-seat two class configuration. Scoot’s existing six 787-9s are also in 375-seat two class configuration while the 787-8 fleet is split with six 335-seat aircraft (without crew bunks) and two 329-seat aircraft (with crew bunks). The aircraft with crew bunks are needed for long haul routes and have six fewer seats (three fewer in economy and three fewer in business) in order to accommodate the ladder to the crew bunks.

The six additional A320s by mid 2018 is a net figure taking into account a mix of A320ceos returning from IndiGo, the delivery of new A320neos and A320ceo lease returns. Scoot plans to begin taking delivery of its first A320neo in late 2018 or early 2019.

All 12 of the A320ceos subleased to IndiGo will be handed back to Scoot by mid 2019 – with the first re-delivery slated for 4Q2017. However, Scoot has arranged to return a small portion of this fleet to leasing companies while most of the fleet will rejoin the Tigerair operating certificate.

Scoot to gradually phase out its A320ceos

Scoot plans to return all its leased A319/A320ceos as the end of their 12 year leases, including the aircraft subleased to IndiGo. According to the CAPA Fleet Database, only four of the 23 A320 family aircraft currently under the Tigerair oprerating certificate are owned while 19 aircraft are leased.

The 12 A320s currently subleased to IndiGo are also all owned by leasing companies. Tigerair also leased two A320s to Tigerair Taiwan but these aircraft are owned by Tigerair (now Scoot), according to the CAPA Fleet Database. Tigerair Taiwan, which is now 100% owned by China Airlines, operates 10 A320s with the other eight aircraft sourced directly with leasing companies. 

Of the 21 leased A320s now operated by Scoot, two have leases expiring in early 2018. These are the oldest aircraft in the Scoot fleet and are currently 11 years old.

The remaining 19 leased A320s have leases expiring in 2022 to 2025 as they were delivered in 2010 to 2013. The two A319s were delivered in 2009 and have leases expiring in 2021. The average age of the A320 family aircraft currently under the Tigerair operator certificate is slightly over six years while the average age of the 787 fleet is less than two years. (As explained earlier in this report, Scoot is the surviving brand from the just completed merger while Tigerair is the surviving operating certificate and all flights are therefore operated under the TR code.)

Scoot average age of fleet by aircraft type: as of 26-Jul-2017

The 12 A320s subleased to IndiGo (and now under IndiGo’s operator certificate) were initially delivered to Tigerair in 2011 to 2013. Therefore, their leases would normally have leases expiring in 2023 to 2025, or several years after the subleased with Indigo end. However, at least one of these aircraft will be returned when the sublease ends.

Tigerair A320 family fleet by delivery year

  Delivery year Variant Owned or
leased
Current
operator
1 2006 A320 Leased Scoot
2 2006 A320 Leased Scoot
3 2009 A319 Leased Scoot
4 2009 A319 Leased Scoot
5 2010 A320 Owned Scoot
6 2010 A320 Owned Scoot
7 2010 A320 Owned Scoot
8 2010 A320 Leased Scoot
9 2010 A320 Leased Scoot
10 2010 A320 Leased Scoot
11 2010 A320 Leased Scoot
12 2011 A320 Owned Scoot
13 2011 A320 Leased Scoot
14 2011 A320 Leased Scoot
15 2011 A320 Leased Scoot
16 2011 A320 Owned Tigerair Taiwan
17 2011 A320 Leased IndiGo
18 2011 A320 Leased IndiGo
19 2012 A320 Leased IndiGo
20 2012 A320 Leased IndiGo
21 2012 A320 Leased IndiGo
22 2012 A320 Leased IndiGo
23 2012 A320 Leased IndiGo
24 2012 A320 Leased IndiGo
25 2012 A320 Leased IndiGo
26 2012 A320 Leased IndiGo
27 2012 A320 Leased IndiGo
28 2013 A320 Leased IndiGo
29 2013 A320 Leased Scoot
30 2013 A320 Leased Scoot
31 2013 A320 Leased Scoot
32 2013 A320 Leased Scoot
33 2013 A320 Leased Scoot
34 2013 A320 Leased Scoot
35 2013 A320 Leased Scoot
36 2013 A320 Leased Scoot
37 2014 A320 Owned Tigerair Taiwan

Scoot plans to double the fleet in five years: “We are definitely on an aggressive growth path"

Scoot has not divulged details of its fleet plan but stated at a 25-Jul-2017 event celebrating the completion of the merger with Tigerair that it plans to double the fleet over the next five years. “We are definitely on an aggressive growth path,” said Scoot CEO Lee Lik Hsin.

Based on the current lease expire dates, Scoot will still be operating up to 29 A320ceos in mid-2022 (slightly fewer if more early lease returns are negotiated). The current Scoot fleet plan envisions 20 787s in 2022 – although the airline plans to look in a couple of years at exercising an option to further expand the 787 fleet beyond 20 aircraft using 787 orders now earmarked for SIA the parent airline.

Assuming a fleet of 29 A320ceos and 20 787s in mid 2022, Scoot will also have taken delivery of approximately 25 A320neos by mid 2022 in order to meet its goal to double the fleet over the next five years. That would leave the last 14 A320neos on order to be delivered from mid 2022 to 2025.

When Tigerair first announced its A320neo order in Mar-2014, the airline stated the aircraft would be delivered from 2018 through 2025. The 2025 date for the last A320neo delivery matches with the lease return on its newest A320ceo, which was delivered in 2013.

Tigerair canceled its last nine A320ceo orders, which would have been delivered in 2014 and 2015, as part of the A320neo order. Its initial A320neo order was 37 aircraft but Tigerair converted two A320neo options to orders in 2015 as part of a deal with Airbus that included the cancellation of two A320ceo orders that were initially assigned to Tigerair Australia. (Tigerair Australia was previously owned by Tiger Airways Holdings but is now 100% owned by Virgin Australia and is in the process of transitioning its fleet from A320s to 737-800s.)

See related report: Tigerair cancels nine A320s - averting excessive capacity in the Singapore market

Scoot could slow down fleet expansion but will still grow rapidly

Scoot has some flexibility with its fleet plan. If needed it could delay the target of doubling the fleet from five years to eight years by deferring A320neo deliveries.

However, this would not change the overall drive to expand rapidly over the next several years. The SIA Group is relying heavily on expansion in the budget sector of the market, where there are generally more opportunities than in its traditional premium business.

While Scoot’s long term business plan is subject to change, as is always the case, changes to the two year business plan are not likely. As outlined earlier in this report, the two year plan envisions significant growth at Scoot as the widebody fleet expands from 14 to 20 aircraft and the narrowbody fleet expands from 23 to 29 aircraft. Scoot has already completed a new network plan that makes full use of the 12 aircraft being added over the next two years.

Scoot unveiled plans on 25-Jul-2017 to grow its network from 60 to 65 destinations with the launch of Harbin, Honolulu, Kuantan, Kuching and Palembang. Several more destinations are in the pipeline for 2018 including additional destinations in India and a second destination in Europe. Scoot’s network is expected to exceed 70 destinations by mid-2019, at which point the fleet will consist of 49 aircraft.

CAPA will review the network plan in more detail, including the five new routes, in Part 2 of this report.

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