SIA Scoot to serve five cities

Singapore Airlines’ (SIA) Scoot Pte. plans to fly to at least five cities by the end of the year as the group adds long-haul budget services to compete with Jetstar and AirAsia X Sdn. Scoot intends to announce destinations in China and Japan, Chief Executive Officer Campbell Wilson said in an Bloomberg TV interview in Singapore. The carrier, which is due to start flights in June or July, has already said it will fly to Sydney and the Gold Coast in Australia. Singapore Air is forming Scoot after low-cost carriers won 26 per cent of passenger at its Changi Airport home, contributing to waning load factors and declining profit. The new unit may do little to help revive earnings amid a long-haul travel slowdown, said K. Ajith, an analyst at UOB-Kay Hian Research. “The market has low expectations from Scoot,” Singapore-based Ajith said in a note today. “Meanwhile, SIA will be plagued by weak outbound travel out of Europe and increased competition at its Changi hub.” Singapore Air’s passenger numbers rose 1.3 per cent last year, trailing an 11 per cent surge for Changi. Scoot will fly services as long as nine hours and offer fares as much as 40 per cent cheaper than full-service carriers, according to Wilson, who was born in New Zealand and has worked at Singapore Air for more than 15 years. The unit will complement the company’s full-service business by either tapping new customers on existing routes or by adding new destinations that are predominately leisure markets, he said. “Singapore Airlines set us up to provide incremental traffic to the group,” Wilson said. The carrier is “missing out” on about a quarter of passengers at its hub, he said. Scoot will start operations with four Boeing Co. 777-200s, purchased from its parent. The fleet will increase to 14 777s by the middle of the decade. Singapore Air also helped formed Tiger Airways Holdings to offer budget flights on short-haul routes beginning in 2004. The carrier, which is now listed, lost money in the last three quarters as its Australian unit pared flights after safety violations. Singapore Air also owns regional carrier SilkAir. Singapore Air, the world’s second-largest carrier by market value, filled 77 per cent of seats last month, a 1.1 per centage point decline from a year earlier and the 18th straight drop.