Scoot tries to stimulate Singapore-Honolulu demand despite inherent challenges

Scoot is trying to stimulate demand on its new Singapore-Honolulu one-stop service by offering promotional return fares from SGD600 (USD457) including taxes.


Summary

  • Scoot is heavily promoting Singapore-Honolulu fares in attempt to stimulate local Singapore-Honolulu traffic on its Singapore-Osaka Honolulu route;
  • Relatively high yields in the Japan-Hawaii market make it difficult to justify offering low fares from Southeast Asia to Hawaii;
  • Low fare full service one-stop options in the Singapore-Honolulu market also make it difficult for Scoot to attract Singapore-Honolulu traffic.

Scoot launched four weekly flights from Singapore to Honolulu via Osaka in Dec-2017. The airline initially stated it had a target of attracting 20% Singapore-Honolulu with the remaining 80% consisting of local Singapore-Osaka and Osaka-Honolulu passengers. However, so far Singapore passengers have consisted of a very small portion of total passengers (less than 10%).

Full service airlines offer Singapore-Honolulu return fares from approximately SGD1,000 (USD761), making it difficult for Scoot to attract Singapore-Honolulu traffic without offering heavily discounted or promotional fares. The full service one-stop options include meals, drinks and checked bags (unlike the Scoot SGD600 fare).

In some cases, full service competitors also have similar total transit times as the Scoot flight via Osaka. China Eastern, Korean Air, Philippine Airlines and Qantas are among the one-stop competitors in the Singapore-Honolulu market. AirAsia also offers an alternative LCC two-stop option.

Singapore-Honolulu is a relatively small market. Stimulation is possible with super cheap fares but does not necessarily make sense for Scoot given that Japan-Hawaii yields are generally strong.

Singapore-Osaka local yields are also relatively strong. Scoot became the only LCC operating nonstop flights from Singapore to Osaka when it launched the Singapore-Osaka-Honolulu service. Scoot previously only offered a one-stop product to Osaka (via Bangkok and Kaohsiung) and continues to operate one-stop fights to Osaka in addition to the new nonstop service.

Scoot is offering promotional Singapore-Osaka nonstop fares starting at SGD356 return (USD271) including taxes. Osaka-Honolulu fares start at JPY26,000 (USD237) return including taxes. Scoot is therefore better off carrying separate Singapore-Osaka and Osaka-Honolulu passengers than trying to attract Singapore-Honolulu traffic.

Scoot’s decision to heavily promote Singapore-Honolulu fares (under a marketing campaign “Fly to Hawaii, the original paradise”) should help it attract more Singapore-Honolulu passengers. However, lower than hoped for load factors and yields on Osaka-Honolulu is likely contributing to the decision to try to pursue more Singapore-Honolulu traffic.

AirAsia X, which operates from Kuala Lumpur to Honolulu via Osaka, has been a particularly aggressive competitor in the Osaka-Honolulu market. Delta Air Lines, Hawaiian Airlines and Japan Airlines also compete on the Osaka-Honolulu route. All three full service airlines offer a daily service compared to the four weekly flights operated by AirAsia X and Scoot.