FOXTROTS

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.

Foxtrots – leading the industry in a dance.

December 17 2013

PAGPFT – Nok, Scoot.

(PAGPFT (pronounced pag-puffed) – People Are Getting Paid For This.)

I read that Nok Air and Scoot plan to establish a JV NFA (no-frills-airline) based in Bangkok. I have a few comments:

 

1. The new airline’s name will be NokScoot. I wonder who thought that up, and how long it took? I suppose not long, because probably the only other alternative they considered was ScootNok. PAGPFT.

 

2. So far, Nok management but more important, managers at its owning company, Thai Airways, have shown no sign that they understand how an NFA works. If they did, Nok, which has been around for a surprising nine years, would be at least twice its current size.

It has a mixed fleet [another mistake] but including 14 B737s. And it will have sold near-6mn seats this year; Thai Air Asia, also started in 2004, is not that much bigger; it will have sold about 10mn.

 

3. Scoot is not much smarter. Conceived as a longhaul NFA, its owners Singapore Airlines realised before the launch that this might not work. Obviously, they had been reading reports in the Travel Business Analyst newsletter about Air Asia X.

But instead of dropping start-up plans (loss of face?), they were tweaked so that today Scoot is operating short and medium-haul flights. On some routes in competition with Tiger, also an NFA and also part of the SA group. And even with SA itself and another SA subsidiary, Silk Air.

PAGPFTx4.

 

4. Snook (my name for the JV) will be based at Bangkok’s reopened Don Mueang airport. If Scoot remains at the other airport, Suvarnabhumi, that would be another PAGPFT.

 

5. In one way at least, the Scoot link with Nok will help Scoot – it will help keep its big aircraft busy.

Scoot has six B777s, some with 320 seats, some with 400. This is twice as big as the biggest aircraft an NFA should operate. But these are ex-SA aircraft, so Scoot probably did not have much choice. Laughingly, or tellingly, the B777s are ER versions – extended range. But – laughingly or tellingly again – the engines have been derated, so they are no longer really ERs, but they could, if necessary, be uprated again. PAGPFT.

 

6. For Nok it is hard to see the advantage of Snook. And if the JV leases Scoot aircraft, then Thai/Nok will probably lose money from this venture. Nok’s fleet is not suitable for medium- or long-haul.

 

7. There was another puzzling comment in the announcement – Scoot’s CEO said that Thailand was Asia’s “premier tourist” destination, so that would help Snook be successful.

i. Do I really need to explain that inbound and outbound travel are different, and require different operational planning? I hope Scoot’s CEO was just saying something – anything – about the operation. If not, then I worry for Nok and Scoot management. PAGPFT.

ii. ‘Premier’ usually means ‘first’, so the largest. I don’t think he knows what he is talking about. Hopefully, some people in the airline are better informed. If you look at just arrivals, then China, Hong Kong, and Macau are each bigger than Thailand. If you start to fiddle with definitions (as I do) then Scoot’s CEO might learn that Thailand’s total is smaller, and only just bigger than Singapore.

 

8. Intriguingly, Snook plans to operate medium- and long-haul operations. Scoot management has already told me that longhaul for its own Singapore-based airline is not currently viable. So how can it be feasible out of Bangkok for Snook? Surely Scoot is not using Snook to test the market for longhaul NFA flights – and halving its losses if they don’t work?

 

 

 Definitions from Travel Business Analyst

-*FSA = full-service-airline. Offering first/business/economy, travel agency bookings, meals/bookings/baggage/cancellations included, etc. As its name indicates – full service.

 

-*LCA = low-cost-airline. (Not a no-frills-airline; see next.) An FSA but with lower operating costs (cheaper longer-hours flight-deck crew, younger/new longer-hours cabin crew, tighter cost control (twinned 3-star hotel rooms, for instance), fewer fare types, which may have first and business cabins, and which allows bookings through travel agencies etc. Usually similar to the parent airline, but a different name, and competition against parent airline allowed.)

-*NFA = no-frills-airline. Among the many essential elements that make a successful NFA are: market freedom in terms of routes and aircraft choice; single aircraft type; where relevant, competition against parent airline allowed; fares that are extremely low when booked at least three months in advance, say US$25; one fare at one time (no wholesale rates, travel agency commissions, etc); no refunds; no service frills; single economy-class cabin; no seat selection; two toilets for 150-seat aircraft; 25-minute turnaround time; cabin crew do daytime cabin cleaning; name and flight change charged at least US$25 each; no trade shows; plenty of consumer advertising and promotion; and much more.

The Fox

 

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