News
Tigerair Singapore to merge with Scoot, SIA posts 70% weaker quarterly results
November 11th 2016
Budget Aviation Holdings (BAH), the parent of Singapore Airlines (SIA) protégés Scoot and Tigerair, will merge Tigerair’s Singapore subsidiary with long-haul low-cost carrier, Scoot. Read More » From the second half of next year, the two budget carriers plan to consolidate under Scoot’s AOC and brand.
"The integration is expected to be realised between mid- and end-2017, given the full spectrum of commercial, operational and regulatory considerations," BAH said. "This will encompass flight scheduling and connections, as well as touchpoint integration for guests including a common website, contact centre and check-in counters."
Commenting on the merger, BAH CEO, Lee Lik Hsin, said Tigerair's business will benefit from the strength of Scoot’s brand for the next phase of its growth.
SIA acquired the remaining shares in Tigerair in 2014 and then delisted the LCC from the Singapore exchange. Tigerair and Scoot have since worked toward full integration, especially through more transfer traffic between short-haul Tigerair and long-haul LCC, Scoot.
“Already, the integration has led to commercial and operational synergies between Scoot and Tigerair that are providing growth opportunities for both airlines, an example being Scoot’s plan to launch its first European service, to Athens, next year,” said BAH chairman and SIA CEO, Goh Choon Phong.
“Following a review, we have determined the logical next step would be to pursue a common operating licence and common brand identity to enable a more seamless travel experience for customers.” Lee Lik Hsin said Tigerair would benefit from the “strength of Scoot’s brand for the next phase of its growth”.
Tigerair serves 40 destinations in twelve countries with its fleet of 24 A320 Family jets. Scoot has six B787-8s and six -9s serving a network of 24 destinations in ten countries.
Tigerair Singapore’s folding into Scoot raises new doubts about the future of the Tigerair brand. Tigerair Australia was never profitable during seven years under the Tigerair Group when it lost $228 million. It has eked out a $1.6 million full-year profit to June 30 after becoming a wholly-owned Virgin Australia subsidiary.
Tigerair Taiwan, which is less than two years old, is likely to close down before year-end, following losses exceeding $35 million.
Separately, Scoot and Tigerair parent, SIA, last week posted a 70% year-on-year second quarter net profit decline, to S$64.9 million ($47 million), as demand and yields slumped amid fierce competition and a gloomy economic outlook.
For the first six months of its financial year, SIA’s passenger revenues slipped 6.4%, with yields falling 2.9% and load factor declining 1.9%, to 78.1%. Capacity was down 0.9% compared with 2015. Scoot was once again the fastest growing carrier at the SIA Group, with its capacity increasing 55.6% in the first half of the fiscal year.
Cargo revenues were down through to September 30. Yields decreased 16.6% with the result that SIA Cargo’s operating loss grew from S$33 million to S$45 million.
At press time, SIA postponed its three times weekly Singapore-Jakarta-Sydney B777-200ER launch until further notice. The service was scheduled to commence on November 23.
