Scoot - New Singapore Long Haul LCC?

There are rumours flying around the web that Singapore's new Low Cost Long Haul Airline will be called Scoot.

Changi Airport is becoming quite a hotbed of LCC activity. The recent numbers show that LCCs are powering much of the airport's growth. Although competition from the GCC based carriers who over fly the Lion City or the explosive growth of KUL an hour's flight away has creamed off some of the lustre. Qantas's new premium airline is supposed to be based in either KUL or SIN. Chances are pretty slim that it will choose KUL in my view - that it will be based in the Malaysian Capital. Since Qantas announced its plan - a long in the works deal was announced showing Malaysian Airlines and Air Asia had agreed to broad cooperation and rationalization. Tony Fernandez will be joining the MH board as a result. Besides Jetstar already has a base in SIN.

Earlier this year - Singapore Airlines announced that it would be starting a long haul LCC using 777-200s - presumably to compete with the likes of Air Asia X which uses wide body Airbus products A330/340 and has A350s on order.

The new airline's proposed name has inadvertently leaked and it has the name Scoot. While I doubt that this would be the name according to Aviation Week quoting Ipos this is the registered brand name.

Doing the usual thing I looked up the term. I personally use the word a little differently but that's just me.Here are the usual definitions one website went into more details on the naming.

But I think the most urgent issue is to assess whether or not the name is a good one. In my view Scoot would have been better for the short haul than the long haul.Tiger would make a better long haul name. (Too bad Tiger somewhat blotted its copy book in Oz).

There are several examples of airlines that have had their names ridiculed. It is a popular past time. Just look at my name for example. SABENA was translated often into the acronym rather than the Belgian airline (formally Société Autonyme Belge d'Exploitation de la Navigation Aérienne) but to "Such A Bloody Experience Never Again"

So a little more on the choice of aircraft. The 777 is wider in the cabin than the Airbus. 19ft 3 inches vs 18 ft 6 inches. Having flown the airbus - I can tell you that 10 abreast seating on these planes is pretty tight. Scoot is supposed to also have 10 abreast. 4 inches on either side of the cabin wall will make the window seats tolerable.

So here is a request. SQ please don't name your airline Scoot. Choose something a little easier and less likely to be ridiculed.

Thanks

Qantas Shows Effects Of Increased Competition

For some time Qantas has been suffering on its premium branded services. The flagship brand is still viable - especially when compared to other airlines who are in a lot worse shape than QF. However Alan Joyce is not waiting for markets to improve. He is moving decisively to address the carrier's ills.

QF suffers from high costs. Across the board it has one of the highest cost structures. Its home market where most of the costs are situated is now at record highs of the Aussie Dollar. Its fuel is more expensive in its home market. Its labour costs are very high. Of course it has a high percentage of GDS distribution costs.

Add to this situation increased competition. Specifically from the GCC based carriers who have been steadily gaining market share on the Kangaroo route. Domestic competition from a resurgent but still struggling Virgin also doesn't help. While Jetstar goes from strength to strength - the uber brand still languishes. And yes Tiger (partially owned by Singapore interests) will be competition.

So today Qantas announced something that would have been unthinkable even just a few years ago. It is cutting routes to London. While the choice still remains - BA will pick up some of the traffic - Qantas is going to cut back even further and refocus the business.

Gone will be a lot of the freebies. Gone will be some of the gas guzzling 747s that will get parked. The last few A380s will be deferred at the back end of the order. In the mean time a whole new round of Airbus narrow body aircraft will be purchased. A320NEOs. But wait - they are not in the QF fleet which has Boeing 737NGs.

Along with 1000 redundancies - this does not auger well for the QF Brand.

The group is fine. Jetstar announcements today are also looking good with the JV in Japan and the increased presence in Singapore. Interestingly, speaking about Singapore, you can almost see SQ getting a little nervous and then perhaps they too will be interested in competing more heavily with QF Group. But wait doesn't Singapore Inc have an interest in some of Jetstar?

Yes competition does get interesting

Cheers

Is The Asia Crisis Over Yet?

Good news emanating from Asia this week.

Singapore is usually a pretty stable proxy for the whole region. It is typically imune from the fluctuations that can be dramatic in some of the other markets like Bali or Hong Kong.

After a dramatic drop off in visitors and time spent that began in the latter half of 2008 and reached its lowest point in the first quarter 2009, the market has slowly inch by inch crawled back. In January 2010 - the market occupancy rose above that of a year earlier. While not fully back to the same level of occupancy enjoyed before - the Singapore Government must be happy with the results. Correspondingly SQ must also be happy to see the back of 2009.

While yields are not fully restored yet - we are seeing rises there too.

This is good news all round

Cheers

Jetstar Asia's Ownership Sorted!

Finally after years of somewhat complicated ownership in Jetstar Asia and Valuair, the situation has been resolved.

The former partners of Orangestar have effectively been bought out. And now the ownership comprises just 2 ownership players: Qantas Group (with 49%) and Westbrook with 51%. Westbrook is wholly owned by Mr Choo Teck Wong (Mr Dennis Choo). Newstar is the name of the new ownership vehicle.

With this change Tamasek (Singapore Inc) will exit the ownership ending its involvement in the enterprise. This also resolves the conflict between Tiger and Jetstar. The alignment of the Tiger shareholders with SQ is clear and Jetstar with QF. We can now look to more fierce competition between the two LCCs.

The operations of the airline remain the same and the 280 employees are unaffected by the change. Ms Chong Phit-Lian will continue to lead the organisation as Chief Executive Officer. Qantas will continue to provide branding support and integration into the rest of the Jetstar group. The Valuair brand will likely now disappear with a single operating certificate a likely outcome.

Phew!

Cheers

Savage Cuts at SQ - 17 a/c "Decommissioned"

SQ is swinging the ax on its routes. Cutting hard and deep into its route structure. Some routes will be combined. Some stations will see less than daily services. Some routes will lose multiple daily flights including such stalwarts as SIN-LHR. Some markets will actually be suspended such as Vancouver.

Axing 17 aircraft and parking them is a big issue even for and airline the size of SQ. Gone will be mostly 747-400s which are currently flooding the market.

SQ is saying that total capacity cut will be about 11%. They are reporting that freight is off 20%. Ouch.

Cheers

SQ Dives into the Ancillary Revenue KoolAid

The temptation of Christ some might say. Ancillary Revenue may be the devil's spawn. But many airlines particularly the US ones are really singing the praises of the Ancillary Revenue and what it is doing to their bottom line.

So it is not surprising that one of the world's most consistent money earners - Singapore Airlines is jumping into the fray and will now charge for Seat Assignment.

Here is the entire text of the press release. In true airline speak - it is confusing. Thank goodness for committee designed PR releases.

Singapore Airlines customers making Economy Class bookings on singaporeair.com now have the additional choice of guaranteeing themselves a preferred seat, with the launch of Preferred Seat Selection.

Currently, preferred seats available for allocation are located in exit rows. Customers will be offered an option to purchase a specific Preferred Seat, when they make their seat selection for applicable Economy Class bookings, including KrisFlyer redemption bookings. Customers can also purchase a Preferred Seat anytime before check-in (which begins 48 hours before flight departure), simply by retrieving their bookings on Singapore Airlines website.

Preferred Seats offer customers more legroom, and are now available for advance and guaranteed customer selection, for a fee of US$ 50 per sector, for all Singapore Airlines’ flights, except short-haul routes within Southeast Asia, and flights served by Boeing 777-200ER aircraft (this aircraft does not have seats located in exit rows). Preferred Seat Selection is subject to official approval in some markets, and some local variations may apply where regulatory approvals dictate.

Other categories of Preferred Seats, that similarly offer customers more legroom, may also be made available for selection in future.

Previously, Preferred Seats were only available on a request basis, without confirmation. The new option now offers a guarantee of assignment, subject to terms and conditions, on a first come, first serve basis.

For seats located in exit rows, Singapore Airlines requires, as part of a commitment to the safety of customers, that those who select and occupy these seats must meet mandatory safety conditions. These prerequisites, which strictly comply with the Civil Aviation Authority of Singapore’s flight safety guidelines, require that these customers must:

• Be at least 21 years of age at the commencement of the journey.
• Be fully able-bodied, and capable of opening the exit doors and moving quickly, or reaching and passing through the adjacent emergency exit.
• Be able to understand and follow the safety instructions in English.
• Be in good health at the time of check-in, boarding, and during the flight.
• Not be pregnant, or carrying infants, or using an infant seat belt.
• Not be under the influence of any intoxicating substance at check-in, boarding, and during the flight, as determined by ground and cabin crew.
• Not require an extension seat belt because of large body size.

As an example, customers travelling on SQ16 to San Francisco, via Seoul, will pay US$50 to select a Preferred Seat on their flight. For customers traveling from Sydney to London via Singapore (eg. SQ222 for SYD-SIN, and subsequently SQ322 for SIN-LON) will have to pay US$100 to select Preferred Seats on both legs (i.e. SYD-SIN and SIN-LON), as each leg is considered one sector.

Preferred Seat Selection is not available on the All Business-Class Airbus A340-500 aircraft as Preferred Seats are only available in Economy Class cabins. Customers travelling in Business or First Class, or the Singapore Airlines Suites, enjoy specific seat selection at any time from the time of booking, with no additional charge.

Virgin Blue a takeover target as Toll exits?

Virgin Group is now the largest single shareholder in the Australian formerly LCC now major network carrier. Toll Holdings has finally ended it ownership position leaving Branson with a small holding and the rest in institutional and public hands.

But after all the shenanigans over its ownership, Virgin Blue might finally be a target of a takeover. Given the tortuous history of airline ownership in Australia, we can always expect the unexpected.

So lets see who emerges as a potential winner. Perhaps SQ might finally realize its vision of a Tranpac carrier by acquiring the Oz based carrier. But then I am merely speculating. But it would be nice to see Tiger and VB together with Tiger being the Uber LCC brand instead of Air Asia. What do you think?

Cheers

Timothy

Singapore Airlines signs for ALTEA/CITP

SQ signs for ALTEA/CITP. Another expected result as the Singapore based carrier had signed for exclusive negotiation status. SQ joins a very long list of carriers ditching their current own internal systems for Amadeus’s current Airline portfolio of products. This is not a good situation for the industry. Setting aside the questions of Amadeus and its ability to meet the market’s needs, I firmly believe that the commercial model for these airlines outsource contracts will come back to bite significantly. There will be blood. Not this year, probably not even next – but in future years.

Interestingly the early PR waffle did not specifically state CITP.

One of the issues I believe will come back to haunt Amadeus is the variants of the system that they will have to support. When the product is finally released there will be a lot of disappointed airlines who will lose functionality in the early time periods until their custom code is delivered.

Still you have to hand it to Amadeus for gaining this momentum. It will look good when they come to IPO. However it will be a huge rod to beat up the client base. The airlines will now come to realize they have replaced one cost monster (aka the GDS companies) for an even more voracious and controlling one. The airline lemming model is alive and well.

Little Trouble in Big China - the China Eastern Saga

Some of you (us) might be just a little confused in the shenanigans going on over at China Eastern. I know I am.

This doesn't make sense.

Singapore Airlines (SQ) made a play To take a minority stake in the Chinese airline (MU). It made sense. Bringing in Western Style discipline but with a distinctly Asian style that SQ has made all its own. Bringing MU up to World class standards wa very attractive to all concerned.

However not EVERYBODY agreed.

China's big fish airline Air China (CA) doesn't like too much competition. It is much happier if there is fractured and unaligned or weak competition. Oh yes and CA's parent China National Aviation Corp sits on MU's board. So just before the end of last year, China National Aviation Corp started making public noises about how it didn't like the merger and that it would offer a lot of money for a much larger stake in MU. Before you can say Kung Fu - they veto the Tamasek/SQ deal and then offer $1.9 Bn for 30% of China Eastern.

To nobody's surprise this was rejected by MU's management and board. At the same time Air China offered a tie up alliance with MU. Again rejected.

Now comes news that MU has jumped into the other side with an alliance with fellow struggler China Southern (CZ). Are you keeping up so far?

So let's see if we can sort out the alliance players here.

MU is not a member of any alliance.
SQ is in Star
CA just joined Star
CZ just joined Skyteam
CX (CA's partner and cross shareholding) is in OneWorld.

So what is the likely outcome?

For veteran China watchers like us... this is just another nice example of the convoluted arrangements in the Middle Kingdom. It will ultimately have a happy ending. Just don't expect one any time soon and the outcome will be a true example of face saving and complexity.

Got it?

And another thing... are alliances really that useful for consumers?

Alitalia - it aint over yet folks

Well they postponed again - but now there is a reason. LH is back interested. SQ is denying everything and even BA is having a look.

The price just went a little higher. However will it go really high? Not in our opinion.

Stay tuned.

Now will we see SQ flying to alternative LON Airports?

The UK and Singapore governments have now signed their much heralded fully open skies agreement that comes into effect coincidently on the same day as the free'er skies between the UK and the USA.

Based on this i believe we shall see SQ flying to LGW (as CX used to and as EK does today) as well as possibly STN if they decide to get into the bulk game using a high capacity A380 as has been mooted for EK's Emirates Express service. Moving at least one flight to another airport will allow SQ to service the LHRJFK market that they have long coveted.

Flying High in a Competitive Industry - Book Review

Cost-effective service excellence at Singapore Airlines.

Loizos Heracleous, Jochen Wirtz Nitin Pangarkar
Published by McGraw Hill 2006

With both a title and subject matter of immense potential this book is a bit of a let down. Sadly it doesn’t even start well. Rather is reads like a management consultant's tome that seeks to justify a business case through an over abundance of fact with little insight. I was in Singapore at the airport changing planes (actually from United to Tiger!) when I spied this book for sale and immediately bought it.

it is clear that the writers had insider access to SQ's people and documents. For this they should have been able to write a real cracker of a book. What makes SQ tick? Why is SQ so good at what it does? Perhaps it sadly personifies the whiter than white world of Singapore Airlines and the city nation itself without any constructive and objective criticism of what is has done wrong and where things have not gone well for SQ. All of us (me included for sure!) can learn from our mistakes. Not illustrating and then examining failures makes the successes seem more routine and perhaps less interesting. Clearly for me it lessens the value of the underlying story that despite the presentation I still find compelling. For example the disastrous partnership with Air New Zealand and the participation by SQ in the demise of Ansett Australia is not even mentioned.

Much of the early data indeed over 25 % of the book is spent on a flawed analysis of the airline industry. Nice useful data but both the facts are somewhat dated and the analysis far too simplistic for meaningful application and background to the rest of the book. You are left feeling unsatisfied.

Still Singapore Airlines is arguably a great airline. Driven by the notion of cost effective service excellence - they have risen to the top of the heap. SQ - you deserve better than this

Cheers
Timothy