SINGAPORE: Scoot, Singapore Airlines' low frills budget carrier will fly to Bangkok in July.
With that, the SIA group will have three brands operating in one market, including Tiger Airways.
And this has prompted some market watchers to wonder if the legacy carrier is cannibalising its own product offerings as Scoot provides a much cheaper option for travellers.
On average, over 20 flights depart Singapore's Changi Airport for Bangkok daily.
It's the second busiest route out of Singapore, after Jakarta.
Come July, SIA's Scoot will begin daily flights to Bangkok, offering a total of some 400 seats per day.
All in, SIA, Tiger Airways and Scoot will operate 11 flights to Thailand's capital city daily.
Paul Ng, global head of Aviation, Stephenson Harwood, said: "The people at SIA or Scoot may see that there is heavy traffic and operate that route for a limited period of time. For long periods of time, it does seem to beg the question whether it's a wise thing to do when there's a sister carrier doing exactly the same thing, inhabiting the same space."
Scoot said it is deploying aircraft to Bangkok to maximise utilisation and operate more efficiently rather than leaving the planes idle.
And this will provide a cheaper alternative for consumers.
For a start, Scoot's offering a return trip to Bangkok at S$88, much cheaper than the current fare of around S$200 from Tiger Airways and about S$500 from Singapore Airlines.
Analysts said the Singapore-Bangkok route will be a hotly contested one, but there are still profits to be made.
Leithen Francis, Asia Editor, Aviation Week, said: "I think Scoot's going to put a lot of pressure on ticket prices. For flights to Bangkok, because they've got the bigger aircraft, they've got more tickets to sell and so the temptation for them to give more discounts.
"And also because they're operating a wider aircraft, the cost per available seat per kilometre is lower than the narrow body aircraft that Tiger or AirAsia operates. So theoretically, Scoot could offer cheaper fares than Tiger or AirAsia and still make a profit. "
Scoot will be the first low cost medium haul carrier to fly a short haul route. And as fuel costs and airport slot constraints continue to rise, experts expect more carriers to fly larger planes on shorter routes in order to stay profitable.
On Wednesday, the International Air Transport Association (IATA) announced that total passenger demand rose 7.6 per cent on-year in March 2012.
IATA estimates that the year-on-year rise in air travel in March was about two percentage points higher than it would otherwise have been as events like the Arab Spring and the earthquake and tsunami in Japan in 2011 had depressed passenger demand.
"If we discount the industry's growth by two percentage points as a result of the extraordinary events in 2011, airlines still managed an expansion in the range of 5-6 per cent," said Tony Tyler, IATA's Director General and CEO.
"Given the prevailing economic conditions with some European states returning to recession, passenger demand is holding up well. But this is bringing little relief to the bottom line because yields are not keeping pace with the continued very high price of oil," he added.
- CNA/cc
With that, the SIA group will have three brands operating in one market, including Tiger Airways.
And this has prompted some market watchers to wonder if the legacy carrier is cannibalising its own product offerings as Scoot provides a much cheaper option for travellers.
On average, over 20 flights depart Singapore's Changi Airport for Bangkok daily.
It's the second busiest route out of Singapore, after Jakarta.
Come July, SIA's Scoot will begin daily flights to Bangkok, offering a total of some 400 seats per day.
All in, SIA, Tiger Airways and Scoot will operate 11 flights to Thailand's capital city daily.
Paul Ng, global head of Aviation, Stephenson Harwood, said: "The people at SIA or Scoot may see that there is heavy traffic and operate that route for a limited period of time. For long periods of time, it does seem to beg the question whether it's a wise thing to do when there's a sister carrier doing exactly the same thing, inhabiting the same space."
Scoot said it is deploying aircraft to Bangkok to maximise utilisation and operate more efficiently rather than leaving the planes idle.
And this will provide a cheaper alternative for consumers.
For a start, Scoot's offering a return trip to Bangkok at S$88, much cheaper than the current fare of around S$200 from Tiger Airways and about S$500 from Singapore Airlines.
Analysts said the Singapore-Bangkok route will be a hotly contested one, but there are still profits to be made.
Leithen Francis, Asia Editor, Aviation Week, said: "I think Scoot's going to put a lot of pressure on ticket prices. For flights to Bangkok, because they've got the bigger aircraft, they've got more tickets to sell and so the temptation for them to give more discounts.
"And also because they're operating a wider aircraft, the cost per available seat per kilometre is lower than the narrow body aircraft that Tiger or AirAsia operates. So theoretically, Scoot could offer cheaper fares than Tiger or AirAsia and still make a profit. "
Scoot will be the first low cost medium haul carrier to fly a short haul route. And as fuel costs and airport slot constraints continue to rise, experts expect more carriers to fly larger planes on shorter routes in order to stay profitable.
On Wednesday, the International Air Transport Association (IATA) announced that total passenger demand rose 7.6 per cent on-year in March 2012.
IATA estimates that the year-on-year rise in air travel in March was about two percentage points higher than it would otherwise have been as events like the Arab Spring and the earthquake and tsunami in Japan in 2011 had depressed passenger demand.
"If we discount the industry's growth by two percentage points as a result of the extraordinary events in 2011, airlines still managed an expansion in the range of 5-6 per cent," said Tony Tyler, IATA's Director General and CEO.
"Given the prevailing economic conditions with some European states returning to recession, passenger demand is holding up well. But this is bringing little relief to the bottom line because yields are not keeping pace with the continued very high price of oil," he added.
- CNA/cc
