FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Scoot = Tiger. We thought of it first.

An excerpt from our monthly Travel Business Analyst newsletter.

 

When the two NFA* subsidiaries in SAG (the Singapore Airlines Group) were moved into one holding company in May 2016, the next step was hardly a surprise – a merger, although it is not called that.

 

And indeed now, this month SAG has said (exactly who etc is not easy to determine, although all observers quote a ‘company announcement’) that starting mid-2017, Tiger will operate under the Scoot name.

 

When Scoot was established in 2011, we said that it should not have been. SAG’s existing Tiger NFA should have been expanded instead. Even more so that, astonishingly, Scoot did not do what it was established to do – fly no-frills on longhaul routes.

 

This is the conversation flow during an interview with senior SAG management in 2013:

 

 

Travel Business Analyst: “I thought you planned Scoot for longhaul routes, but it is operating only short- and medium-haul. Are you not shutting it down to avoid loss of face? The airline is a mistake.”

 

Singapore Airlines: “Who says so?”

 

We do.”

 

(Laughs [at the idea, not at the interlocutor]) “Well, we would respectfully disagree.”

 

Why didn’t you expand Tiger instead of creating Scoot? Why create another airline, which does almost the same thing on almost the same routes?”

(Paraphrased) “It is not almost the same routes. There are some Scoot routes that you can do with narrow body, but Scoot was set up to tap into that market segment that is looking for budget travel but over a slightly longer distance than the traditional NFA operates.

 

“Longhaul is in the plan, but with today’s fuel prices, the plan is to focus on medium-haul for now. [Oil was about US$90/barrel when Scoot was formed; about US$95 at the time of the comment.] There is some shorthaul but that tended to be partly for aircraft utilisation.

 

“Why Tiger can’t do it? Well, although we are the biggest single shareholder (just under 33%), we don’t control it; it is a separately-listed subsidiary, independently operated, and separately managed. [SAG] has nothing to do with Tiger on a day-to-day basis.

 

“But we own 100% of Scoot. We saw an opportunity to get into this new market segment and we did it.”

 

 

Our contemporary complementary comments:

 

‘That the launch of Scoot should not have happened after SAG realised that it could not operate longhaul profitably. If it wanted to operate medium-haul NFA routes, then it should have used Tiger. If that would have required increasing SAG’s shareholding and buying slightly-bigger aircraft, then do it.’

 

 

Subsequently, SAG did indeed increase its shareholding in Tiger in order to control it. Obviously at that time, when SAG management made its decision to merge the two NFAs, it also decided which would be the primary one.

 

This seemed to be Scoot as on more than one occasion SAG took Tiger off a route, or reduced its capacity, to let in Scoot. That is part of the reason Scoot seat sales are at +49% YTD with Tiger’s at 0.4% – although at the end of this year, Scoot will still be only 60% the size of Tiger.

 

Part of the reason for preferring Scoot could have been some earlier bad news for Tiger – including a government-forced shutdown for technical reasons (which presumably meant safety) for its then-owned Tiger Australia subsidiary, problems with schedules reliability for its Singapore-based subsidiary, partial-shutdowns and/or sales of its subsidiary airlines in Indonesia and Philippines.

 

We presume this is the reason it decided to change the airline’s name. But if that was indeed the reason, then it appears to have been badly handled – because the change was from Tiger Airways to Tigerair! (We hope no one was paid for that!)

 

Strangely, none of these bad management moves and negative developments seems to have touched the source – SAG itself. Is it because in Singapore, SAG is such an admired institution that it is considered also to personify Singapore?

 

 

 

*Our definitions:

-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. If relevant, usually similar to the parent airline, but a different name, and competition against parent airline allowed.

 

-NFA = no-frills-airline. We believe that 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; paid 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.

 

 

See also:

-AirFrance-KLM new subsidiary; we thought of it first. See http://wp.me/pTv9-jW

-What full-service-airlines need to do to survive. See

https://medium.com/@tbaoffice/airline-strategy-185fa3ef7d0c#.octgrysmf

 

The Fox

Remember, I’ll be famous after I’m dead.

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