Singapore airlines launched a low cost medium and long haul airline Scoot today. Scoot will be initially operating to Sydney and a couple of other holiday destinations. It is believed that Scoot will compete with Air Aisa X and JetStar in the APAC long haul low cost market.
Scoot starts with four 777-200 aircraft inherited from its parent, Singapore Airlines. Scoot will use the same airport as SIA and will fly to main airports in destination. All the 777 flights operate in a two class structure.
Now, what is the difference between Singapore Airlines and Scoot? Both use the same airport and similar aircraft for its operation. Labour market is quite flexible and productive in Singapore already and hence Scoot may not be able to make further savings from the labour market. One of the major differences is the way Scoot is marketed. The official colours and the cool nature of the official adverts are refreshing. Also, Scoot, like any other low cost airline, has debundled its entire product. Customers without hold baggage and those who are ready to starve for the duration of the flight are rewarded with lesser priced ticket.
The two class configuration also allows to carry 15% extra customers in each flight. Will these minor differences entyce travellers to take Scoot? At the moment, Scoot is targeting leisure travellers. These kind of travellers do have check-in baggage and hence have to pay for it and most people would prefer to have something to eat during long flights. Therefore most of the passengers would use the full service, that is, seat bag and food.
Even after paying for bags and food, if the fare is cheaper than Singapore Airlines, will it attract regular Singapore Airlines customers? In such a case wont Scoot cannibalise its parent company's revenues?
During economic downturns, people generally cut back on their holiday expenditures, especially on the long haul holidays. Scoot is positioning themselves to cater for a segment which is diminishing. On top of this, as long as Scoot competes with JetStar and Air Asia X, it will be a healthy competition. But, if it starts eating SIA's market share, it will pose an interesting dilemma for its parent company.
Will the idea of Scoot take off? Even if it does, will it cannibalise SIA? Only time will tell.
Scoot starts with four 777-200 aircraft inherited from its parent, Singapore Airlines. Scoot will use the same airport as SIA and will fly to main airports in destination. All the 777 flights operate in a two class structure.
Now, what is the difference between Singapore Airlines and Scoot? Both use the same airport and similar aircraft for its operation. Labour market is quite flexible and productive in Singapore already and hence Scoot may not be able to make further savings from the labour market. One of the major differences is the way Scoot is marketed. The official colours and the cool nature of the official adverts are refreshing. Also, Scoot, like any other low cost airline, has debundled its entire product. Customers without hold baggage and those who are ready to starve for the duration of the flight are rewarded with lesser priced ticket.
The two class configuration also allows to carry 15% extra customers in each flight. Will these minor differences entyce travellers to take Scoot? At the moment, Scoot is targeting leisure travellers. These kind of travellers do have check-in baggage and hence have to pay for it and most people would prefer to have something to eat during long flights. Therefore most of the passengers would use the full service, that is, seat bag and food.
Even after paying for bags and food, if the fare is cheaper than Singapore Airlines, will it attract regular Singapore Airlines customers? In such a case wont Scoot cannibalise its parent company's revenues?
During economic downturns, people generally cut back on their holiday expenditures, especially on the long haul holidays. Scoot is positioning themselves to cater for a segment which is diminishing. On top of this, as long as Scoot competes with JetStar and Air Asia X, it will be a healthy competition. But, if it starts eating SIA's market share, it will pose an interesting dilemma for its parent company.
Will the idea of Scoot take off? Even if it does, will it cannibalise SIA? Only time will tell.
new way to attract the diminishing demand on the market.
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