Scoot relies on improved Australia connections to support Athens and India service

    Scoot is working on rescheduling select Australian flights to improve connections with its India and Europe network. Scoot is banking heavily on Australia connections to support the Athens service and other potential European routes, along with all its Indian destinations. However, in most Australia-Athens and Australia-India services a lack of convenient connections may hinder sales.

    The Singapore Airlines Group medium/long haul low cost subsidiary launched services to India in May-2016 and is commencing its first route to Europe in Jun-2017 with a service to Athens. Scoot currently operates 23 weekly flights to Australia, including seven to Perth and Sydney, five to Melbourne and four to the Gold Coast. Australia has been a key market for Scoot since its Jun-2012 launch. Sydney and Gold Coast were its very first routes while Perth was added in late 2013 followed by Melbourne in late 2015.
    Almost all of Scoot’s Australia-Singapore traffic now consists of passengers in the local Australia-Singapore market. Scoot is keen to rely less on the highly competitive Australia-Singapore market but rather carry more Australian passengers beyond Singapore.

    A more diversified Australia customer base should improve the profitability of its Australia operation and potentially support growth through additional frequencies. Scoot has no short-term plans for expanding in Australia but the new schedule should improve load factors and yields in a challenging marketplace, eventually providing a business case to support more capacity.

    Scoot’s available seat kilometres (ASK) have increased by 50% since the end of 2015 but Scoot’s capacity to Australia has decreased. Additional capacity to Australia cannot be pursued until and unless Scoot offers Australian passengers better connectivity beyond Singapore – through new destinations and reducing transit times to existing destinations.

    Scoot one-way weekly seat capacity to Australia: Jun-2012 to May-2017

    Source: CAPA – Centre for Aviation & OAG

    Scoot is expected to offer two departure times from Melbourne and Sydney to facilitate connections in Singapore while maintaining, or only slightly increasing, overall capacity. Perth and Gold Coast flights are less likely to be adjusted.

    A new Australia schedule is particularly important to support Scoot’s new Athens service. Greece-Australia is a relatively large market with approximately 60,000 one-way annual passengers. Greece-Australia is more than three times the size of the Greece-Singapore market and is almost as large as the entire Greece-Southeast Asia market.

    Scoot is relying heavily on Australia point of sale, particularly Melbourne, as the city has Australia’s largest Greek community, and the largest outside of Greece globally. It has aggressively promoted Melbourne-Athens since launching sales in Aug-2016 but Scoot is yet to implement adjustments to its Australia schedule that are critical in making the Athens route successful.

    Scoot’s Melbourne-Athens schedule currently involves a total journey time of 29hr30 minutes from Melbourne and 38hr45min on the return from Athens. There is almost a 10hr layover in Singapore on the outbound sector and a more than 20hr layover on the return sector. Scoot’s fares are very competitive, starting at AUD800 return excluding bags and meals. The long transit time in Singapore dissuades most passengers. Fares from Gulf airlines start at AUD1500 but offer a much quicker journey time and a full-service product. Scoot’s AUD800 fare is also not available on most days and Scoot is only offering two Melbourne-Athens connections per week while competitors offer a daily product.

    From an India perspective, Scoot launched services to Amristar and Chennai in late May-2016 (both with very short lead times for sales) and added Jaipur in early Oct-2016.

    The Singapore-Jaipur route is being transferred to sister airline Tigerair on 25-Mar-2017. Tigerair, which also serves six destinations in southern India, is in the process of merging with Scoot, resulting in a single entity under the Scoot brand by the end of 2017. Scoot already uses Tigerair to offer its Australia passengers short-haul connections within Southeast Asia but Scoot’s main growth markets from Australia are India and Europe. Scoot is planning to eventually serve multiple destinations in Europe with a second route in addition to Athens potentially being launched by the end of 2017.

    A retiming of some of Scoot’s Australia flights to improve connections to Athens, India (as well as some of Tigerair’s short haul destinations) has been in the pipeline for several months but has not yet been implemented. It is essential for Scoot to move as quickly as possible on schedule adjustments for Australia.

    However, reworking schedules can be a long process, given the need to secure new slots. Scoot will likely not be able to secure new slots in Australia until – at the earliest – the start of the southern summer 2017 season in late Oct-2017. In the meantime, Scoot’s Australia performance will suffer.