Scoot and Tigerair integration: What it means for travellers

Scoot and Tigerair integration: What it means for travellers

Merging Scoot and Tigerair is not a simple process, as there are many commercial and regulatory consider, CEO Lee Lik Hsin told Channel NewsAsia, but added that a decision won't take "years" to reach.

tiger scoot collage
Budget airlines Scoot and Tigerair will come under a single brand on Jul 25, 2017.

TOKYO, Japan: Long-haul flights to Europe, integrated transportation packages including land and sea transfers, and leveraging the Scoot-Tigerair network to move more people in and out of Southeast Asia – these are some plans Budget Aviation Holdings CEO Lee Lik Hsin has his eye on, since taking the helm four months ago.

Announced in May, the integration of Singapore budget carriers Scoot and Tigerair under one holding company – Budget Aviation Holdings – is seen as a step towards an eventual merger of the two Singapore Airlines (SIA) subsidiaries.

While SIA has said that the move aims to realise “commercial and operational synergies” between the two airlines, what does this translate to, in terms of benefits to travellers? CEO Lee Lik Hsin explained this, and more, to Channel NewsAsia in an exclusive interview on Monday (Sep 26).

Q: It’s been four months since you took the helm at Scoot and Tigerair. What were your priorities, and are you happy with the progress?

Lee Lik Hsin: The very first thing that we did was merge our reservation systems. That may sound like a backroom event, but it actually also made things more seamless for our customers. Previously… customers couldn’t buy a complete package on a Scoot and Tigerair connection. This is not so much for Singapore-based customers, but (it affected) customers in say, China, booking a Scoot flight to Singapore, and then booking a Tigerair flight to Bali or Phuket. They could buy the ticket but not the ancillaries – the baggage or the meals. So we’ve solved that now, and they can make the complete purchase in one transaction, saving them time.

The other benefit is that we are able to manage our network between the two airlines. Why is this a benefit for the customer? As individual airlines we may make a decision to stop certain flights, which then mean the customer has less choice, in terms of flights. One good example is Hong Kong, where Scoot used to have just one flight, and Tigerair, three. Truth be told, the single Scoot flight was struggling, it was very difficult to sustain. Had we continue to be independent companies, Scoot probably would just have withdrawn the flight. But now we are able to substitute with a Tigerair flight instead. We are starting this later in the year, and so in terms of choice to the customer, there are still four flights to Hong Kong, from the group.

Q: The integration of Scoot and Tigerair is seen as a step towards merger. When’s the soonest can you give an update?

Lee: We need more time. We’ve said this from the start, ever since the announcement in May, that there are many considerations that we have to take into account, both commercial as well as regulatory. It’s not a simple process and it is our responsibility to go through the proper due diligence on every single aspect before we make any kind of decision.

Q: Could this take years?

Lee: I think I would safely say that it is not a very long-term objective, so – not “years”.

Q: Scoot has been rapidly expanding new routes and flights in the last year or so. Which new geographies are you eyeing next?

Lee: We are open to all possibilities. Our expansion is going to be fairly rapid, over the next few years. We have eight more aircraft coming into the fleet, over a period of three years – so that’s 20 aircraft in total, against the current 12 that we have. That’s a very, very high average growth rate. So we obviously will need to fly to new points in this timeframe.

Our flights to Europe (starting with Athens) is basically the realisation of a dream. We started out saying we’re going to be a medium- and long-haul airline, but circumstances have restricted us to flying mainly medium-haul over the last four years or so. The introduction of the (Boeing) 787 into our fleet since 2015 and also the recent integration with Tigerair, has boosted our confidence in our ability to go long-haul. (This is) mainly because for long-haul travel, it will be very difficult to be just carrying passengers to and from a location to Singapore. This is where Tigerair’s short-haul regional network comes into play. We can now channel passengers from Europe to many, many points in Southeast Asia and vice versa.

Q: Given that fares for full-service airlines are relatively affordable these days due to lower fuel costs, are you concerned about the competition on Singapore-Europe routes?

Lee: We will be even more affordable. Our promotional rate for a return trip from Singapore to Athens is about S$600.

Q: To better fulfil the role of moving travellers in and out of Southeast Asia, will you look into offering integrated transport packages, including land and sea transfers?

Lee: We are looking to explore how we can allow our guests to seamlessly be able to book such transport options, through a single purchase, when they come onto our website. It is not directly related to the integration between Scoot and Tigerair per se. This is more (related to) partnership agreements, with possibly ferry services. But that is something that we are exploring.

Q: Is this a trend among travellers, or something they would want because of the convenience?

Lee: It will certainly be advantageous for us to be able to provide this. But at the same time, I think travellers today are very savvy and they can find options for themselves. So while we try to do it and make it more convenient, it’s not something that is necessarily a must-have in every single destination.

Q: How do your plans tie in with the recently announced alliance between Asia-Pacific budget airlines, which Scoot and Tigerair are a part of?

Lee: Basically the very first benefit of that alliance is the power of the individual airlines’ brands in their own markets. We in Scoot and Tigerair are obviously well-known in Singapore, but we’re not so well-known in the Philippines – Cebu Pacific is very well-known in the Philippines. So if we’re able to showcase our products on their website, we will gain from that strength of distribution. That’s the primary and most important aspect of the alliance.

The second aspect is connectivity – being able to carry passengers from the alliance partners’ networks onto our networks. This could be a connecting flight – using Cebu again as an example – from a domestic point in the Philippines, through Manila, to Singapore. So this is more (to facilitate) connection outside of the Singapore hub.

Source: CNA/ll