Singapore Airlines' Budget Division Aims for Growth via European Flights

Singapore Airlines is pursuing more than 50 cost-cutting initiatives including reducing fuel burn and reviewing its relationship with key suppliers as part of a three-year plan to make the airline more competitive, a newsletter to staff shows. (Reuters Photo/Edgar Su)

By : Aradhana Aravindan | on 4:00 PM August 17, 2016
Category : International, SE Asia

Singapore Airlines Ltd's low-cost carrier division aims to grow by increasing its number of nonstop flights to Europe, a senior executive said, hoping to attract budget-conscious travelers to popular long-haul routes.

Budget Aviation Holdings also aims to raise the proportion of connected flights between its short-haul Tiger Airways and medium-to-long-haul Scoot brands from a single-digit percentage, its chief executive, Lee Lik Hsin, told Reuters on Wednesday (17/08).

"We do expect this (connectivity) to grow, and when I say grow I actually mean multiple fold," Lee said. "The ingredients for being able to operate to Europe, we think we now have them - aircraft and connectivity."

Budget Aviation was created this year after parent Singapore Airlines took Tiger private and paired it with Scoot.

Scoot announced its first Europe-bound flight on Tuesday. Regular flights between Singapore and Athens begin next year, bringing Scoot into competition with full-service Gulf carriers which have been increasing market share on Asia-Europe routes.

Lee said he aimed to add more European routes, but did not elaborate on destinations or time frame.

Airlines have been benefiting from a drop in oil prices as well as a travel boom in Southeast Asia which has spurred many regional carriers to order several hundred aircraft from Airbus Group SE and Boeing Co.

"There is room for growth," Lee said. "The overall travel market will continue to grow and the overall budget travel market will continue to grow."

Budget Aviation has nine Boeing 787 planes on order for Scoot, and 39 new-generation Airbus A320s for Tiger. Lee said his firm would for now continue to use only those two types of aircraft.

Scoot and Tiger operate under separate licences but share an organisational structure for some functions and cost-saving via economies of scale.

Bringing the two under the same brand or licence would involve regulatory, commercial and other considerations, of which an internal review would be necessary before making any commitment to change, Lee said.

"Of course, we will not exclude any possibilities," he said.


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