Singapore

In selecting Gold Coast over China as its second destination, Scoot again goes with low risk option

New Singapore Airlines (SIA) low-cost long-haul carrier Scoot announced today Gold Coast as its second destination after Sydney and confirmed its intention to launch services in Jun-2012. Scoot has decided to launch with two routes to Australia because the process of securing authorisations for China, which Scoot has said will also be served within its first year, is longer and more unpredictable. Gold Coast was selected over two other Australian airports on Scoot’s short list, Adelaide and Brisbane, because of Gold Coast’s excellent track record of success with LCCs, including Asia’s two existing low-cost long-haul carriers – AirAsia X and Jetstar. Gold Coast is also the largest airport in Australia currently lacking a link with Singapore.   

Gold Coast is the fifth largest international airport in Australia behind Sydney, Melbourne, Brisbane and Perth (see Background information). Among Australia’s top airports it has by far the highest LCC penetration rate. Currently LCCs account for 98% of total capacity (seat) at Gold Coast, including 90% of international capacity and nearly 100% of domestic capacity.

Emirates' Ho Chi Minh service to impact Asian carriers, but provides Vietnam with much needed growth

Vietnam’s international market will get a long overdue shake-up later this year as Emirates finally launches services to Vietnam. Emirates’ decision to launch Dubai-Ho Chi Minh City service from Jun-2012 hardly comes as a surprise as Vietnam was the only major Asian country missing from the carrier’s fast-expanding route network. The rapid growth of Vietnam’s tourism and business sector combined with the current relative lack of long-haul capacity compared to other major ASEAN countries makes the Vietnamese market particularly appealing to Emirates.

Emirates will initially operate a daily flight between Dubai and Ho Chi Minh using 278-seat two-class A330-200s, resulting in 3892 weekly seats to and from Vietnam. This will immediately make Emirates the third largest carrier from outside Asia serving Vietnam. As a result, Emirates is poised to become one of the leading carriers in the Vietnam-Europe market, which is growing rapidly as Vietnam emerges as a major tourist destination.

Why Singapore Airlines is reducing Houston to less than daily service

Singapore Airlines (SIA) decided earlier this week to reduce capacity to Houston, which in late March will become the carrier’s only US destination without daily service. The decision to drop two of the seven weekly Boeing 777-300ER frequencies SIA currently operates on the Singapore-Moscow-Houston route is a response to low demand. Houston has been the worst performing US destination for SIA since the carrier began serving the Texas city in 2008.

Thai Tiger officially and finally dropped, pressuring Tiger to look elsewhere for growth

Thai Tiger, the proposed joint-venture between Thai Airways and the Singapore-based Tiger Airways that has been languishing for months, is finally being recognised by Tiger as over. This acknowledgement continues the pressure on Tiger Airways to find bases for aircraft it planned to deploy with Thai Tiger as well as a number of other projects that have languished as well. The impact of these non-starts is evident at Tiger Airways Singapore, which last month announced a large loss for the quarter ending 30-Sep-2011 as it failed to absorb the large capacity Tiger put in after having nowhere else to deploy it to.

Malaysia Airlines new business plan targets premium sector, following strategies of Cathay and SIA

Malaysia Airlines (MAS) has unveiled a new business plan aiming to restore profitability by significantly cutting capacity and increasing focus on the premium sector, which includes the launch of a new regional premium carrier in 1H2012. Several business units including maintenance, cargo and ground handling are to be spun-off, most likely in 2012, as part of a bid to free up capital required to fund rapid fleet renewal and the reinvigoration of MAS’ core business. MAS will swiftly phase out its B747-400 and A330-200 fleets over the next year, leading to a 12% reduction in total capacity.

The decision to draft yet another new business plan at MAS, which has made multiple turnaround attempts over the years, hardly comes as a surprise following the landmark partnership agreement forged in Aug-2011 with long-time rival AirAsia. The agreement, which included an equity swap and the appointment of AirAsia Group CEO Tony Fernandes to the MAS board, inevitably required MAS to downsize and abandon its attempt to compete with AirAsia at the low end of the market.

Sydney Airport divides terminals along alliance lines but risks alienating new carriers

Sydney Airport will narrow its competitive disadvantage of having separate domestic and international terminals with a plan to split its terminals by 2019 into two alliance-based precincts: one for Qantas and its partners and one for Virgin Australia and its partners. The two groupings will account for 81% of all movements. Leftover international carriers will in most cases use the Virgin terminal while a plan is underway to address leftover domestic and regional airlines, notably Tiger Airways and Regional Express. While the plan may placate the two big airline groupings in Australia, Sydney airport may face a shortfall of placement options for new carriers looking to offer their passengers onward domestic connections.

Sydney airport expects to formally begin stakeholder consulting with the aim of including the proposal in its 2014 master plan, which will be drafted in late 2013. Qantas and Virgin Australia, Sydney's two largest occupants based on movements and seats, have already given their support with the signing of a non-binding memorandum of understanding. The proposal will critically increase gates but not change slot restrictions, the airport's curfew or noise regulations.