Scoot to Sydney and its impact on others

SIA’s new low cost unit Scoot today announced Sydney as its first destination. The airline will launch daily services to Sydney in mid 2012, and obviously with Boeing 777-200 aircraft. It could work well for Scoot if they build up the right network, and Scoot already has begun a promotion to give away two tickets on Premium Class of its first flight to Sydney.

What implications could this have on others ?

 By the first week of May 2012, scheduled capacity on the Singapore – Sydney route will be as below.

Airline Daily Flights A/C Mix
British Airways 1 (from/to LHR) 1×747-400
Qantas Airways 3 1×747-400, 1xA330-300, 1xA380-800
Singapore Airlines 4 1×777-200, 1×777-300, 2xA380-800

 With this set of traffic, Qantas Airways seems to be the airline that is set to lose the most. However, Scoot’s own parent Singapore Airlines will clearly get hurt in their yields if they continue the same aircraft mix after Scoot’s entry.
 While Scoot might have chosen Sydney as their first destination owing to the fact that AirAsia X does not fly there, this move is very unlikely to have a significant impact on AirAsia X for the foreseeable future. AirAsia X’s (and AirAsia’s) larger network gives it the edge to profitably face this challenge by focusing on the areas where it already has a strong foothold. Sydney is still very much a premium market compared to elsewhere in Australia and the low fares catchment could be smaller.

 Even if SIA might have hoped for it, the effect on Emirates from this move would be close to zero, unless Scoot launches flights to UK, Italy or Lebanon any time soon.
 One has to wonder whether this means SIA has shoot on its own foot. But it really is not, as Scoot will achieve SIA’s target on scaring away the competitors. On a strategical level, it’s a mixed move. But they could have done a lot better.

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