Singapore Airlines Group follows Qantas in implementing LCC-FSC codeshares

Singapore Airlines (SIA) has begun placing its code on flights operated by LCC subsidiary Scoot, marking another step in the evolution of the SIA Group.

The new codeshare agreement between Singapore Airlines, SilkAir and Scoot recently kicked off by covering Scoot-operated flights to eight Scoot destinations. None of the eight destinations are served by either of the SIA Group’s two full service brands: Athens in Greece; Clark in the Philippines; Gold Coast in Australia; Hat Yai and Krabi in Thailand; Ipoh and Kuching in Malaysia; and Palembang in Indonesia.

SIA and SilkAir plan to gradually add their SQ and MI codes to another 24 Scoot destinations that are also only served by Scoot. These are: Amritsar, Dalian, Haikou, Hangzhou, Harbin, Honolulu Jaipur, Jeddah, Jinan, Kaohsiung, Kuantan, Lucknow, Macau, Nanjing, Ningbo, Qingdao, Quanzhou, Sapporo, Shenyang, Tianjin, Tiruchirappalli, Wuxi, Xi’an and Zhengzhou.

The new codeshare is hardly a surprise. Scoot has been interlining with SIA and SilkAir since early 2013. The interline initially only included Scoot selling select SIA and SilkAir operated flights but was expanded in 2015 to include SIA selling select Scoot operated flights. However, the number of passengers connecting from SIA or SilkAir to Scoot has always been very small – even after Scoot merged with short haul sister LCC Tigerair.

A bigger and more robust partnership between SIA Group’s two full service subsidiaries and now one low cost subsidiary is needed to drive more significant transit traffic and fully embrace the group’s new multi-brand model. Network synergies can be better exploited with a codeshare product.

In some respects, the SIA Group is taking a page from the strategy used by the Qantas Group. Qantas has been codesharing with LCC subsidiary Jetstar Airways for several years and also has been codesharing with Singapore based Jetstar Asia since 2011.

From a product perspective, the Qantas-Jetstar and Singapore Airlines-Scoot codeshares are similar. SIA or SilkAir passengers connecting to Scoot under the SQ or MI code will be offered a complimentary meal and beverage on the Scoot operated flight as well as a blanket on flights over four hours. Checked bags are also included and are checked through to the final destination.

The Qantas-Jetstar codeshare has the additional benefit of providing Qantas passengers with complimentary seats on the Jetstar operated flight. Passengers flying on the Qantas code can even select without incurring any additional charges extra legroom seats on Jetstar operated flights such as the emergency row and bulkhead. The Singapore Airlines-Scoot codeshare does not provide such a benefit and forces passengers to pay for all seats on the Scoot operated flights including both regular seats and extra legroom seats.

Another important distinction of the Qantas-Jetstar partnership is their codeshare covers routes both airlines operate. For example, both airlines operate from Queenstown to Sydney; Qantas puts its code on the Jetstar-operated flight as the Jetstar flight connects with Qantas flights in Sydney that the Qantas flight from Queenstown does not connect with (such as to Sydney to Singapore).

SIA/SilkAir and Scoot will inevitably need to expand their codeshare to include overlapping destinations in order to maximise connectivity. Limiting the codeshare to exclusive Scoot destinations indicates an unwillingness to fully embrace the multi-brand model. Scoot has more frequencies than SilkAir to several regional destinations that both airlines serve and by not codesharing on these routes the group is missing out on potential connecting traffic.

Improvements in the connection product may also be needed to attract more traffic. However, whether the new codeshare succeeds will not hinge entirely on product and network connectivity. How the joint itineraries are priced will be the main determining factor.

Often codeshares fail to generate significant volumes of traffic as the joint fares are not competitive. Upgrading a partnership from an interline to a codeshare – or expanding an existing codeshare to include more destinations – does not necessarily lead to more traffic. Time will tell if the SIA Group will finally be able to fully exploit the opportunities in joint LCC-FSC itineraries.