Singapore Airlines creates new long-haul low-cost carrier: Jetstar and AirAsia in its sights?
Singapore Airlines is firing a big shot across the bow of Qantas subsidiary Jetstar and Malaysia-based AirAsia with what SQ is calling "a new no-frills, low-fare airline operating widebody aircraft on medium and long-haul routes".
We'd expect the lucrative Australian market to be firmly in the sights of the new airline. Its competitor AirAsia X has taken a bite out of the low end of the Kangaroo Route market with flights from Melbourne, Perth and Darwin to Kuala Lumpur, which connect with flights to Paris Orly and London Stansted.
Singapore Airlines' CEO Goh Choon Phong certainly thinks there's a market for a new airline: "As we have observed on short-haul routes within Asia, low-fare airlines help stimulate demand for travel, and we expect this will also prove true for longer flights."
Reassuring business travellers that Singapore Airlines does not intend to devalue its main brand, Goh emphasised: "At the same time we remain fully committed to the further growth of SIA, which will continue to offer the highest-quality products and services to our customers."
Flights on the new airline will start within the year, Singapore Airlines says, and it's a fair bet that the base will be Singapore Changi airport's low-cost terminal.
The planned widebody-only strategy, using larger twin-aisle planes, has worked well for Singapore Airlines and competitor Emirates, neither of which operate smaller, single-aisle, narrowbody planes from their megahubs at Changi and at Dubai.
The name hasn't yet been announced, but it'll be different to Singapore Airlines' two existing subsidiaries, Tiger Airways and SilkAir.
Tiger -- which has a separate shell company for its Australian operations -- mostly flies within five hours of Singapore's Changi airport. It uses economy-only narrowbody Airbus A320 aircraft exclusively to gain lower overhead costs compared with larger planes. With a different name, Singapore is clearly looking to differentiate the new airline from just being "Big Tiger" or "TigerX".
SilkAir also uses A320 planes (and smaller A319s of the same family) and flies to a slightly more upmarket set of regional destinations than Tiger.
Given the widebody focus and the need to have the new subsidiary flying within the year, we'd expect either Airbus A330 or Boeing 777 aircraft to be used on the new airline's routes, in high-density configurations.
Singapore Airlines currently has nineteen A330s and sixty-six 777s, and it might well look to shift some of those planes over to its newest offshoot. Other options include leasing planes from other airlines or the big leasing companies, picking up used aircraft from other airlines or buying brand-new ones from Airbus or Boeing.
Its rivals (principally Air Asia X and Jetstar) decided on used Airbus A330 and A340 aircraft for their own operations.
Rival Tony Fernandes, CEO of Air Asia, responded quickly on Twitter to Singapore's plans in his usual style:
"singapore airlines to set up a long haul low cost carrier. Hahahaha. Deja vu. Airasia staff should be proud that we have been copied again. Will be same result like tiger."
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15 Apr 2011
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SQ handed over A LOT of routes to Silkair - so they would operate narrowbodies if they didn't have a subsidiary to operate them through...
This is exciting :)