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.
Gold Coast is eager to attract more long-haul carriers and the airport is always an attractive choice for LCCs. AirAsia X and Jetstar are now Gold Coast’s only two long-haul carriers. AirAsia X currently offers five weekly flights to Kuala Lumpur while Jetstar operates five weekly flights to Osaka and a daily flight to Tokyo Narita.
Flights to New Zealand now account for 40% of Gold Coast’s total international capacity and are operated with narrowbody aircraft from three carriers – Jetstar, Virgin Australia and Air New Zealand. Jetstar now has a leading 51% share of total capacity at Gold Coast Airport (includes domestic and international) while Virgin Australia (which is still considered an LCC although it has shifted to a hybrid model) has a 41% share.
Scoot will initially serve Gold Coast with five weekly flights, which should give it about a 15% share of international capacity (seats) at the airport. Scoot says it will launch the route in Jun-2012 but has not yet set an exact launch date. Scoot announced in Dec-2011 Sydney as its first destination, which is also expected to be launched in June but has also not yet been allocated a specific launch date.
Scoot to launch with Sydney in Jun-2012, followed shortly by Gold Coast
Scoot will have two 777-200s in its fleet by the time it begins operations in June. While it will have sufficient aircraft to launch both routes simultaneously, Scoot is planning to launch Sydney a few days ahead of Gold Coast as the carrier would prefer to perfect its operation with one route, using its second 777-200 as a spare, before moving to a two-route schedule. June is an ideal time for Scoot to launch services because in Singapore there is a month-long school holiday in June.
Scoot will not be able to begin ticket sales until it secures its air operating certificate (AOC), which it expects will be awarded by the end of March. The carrier will be conducting proving flights over the next several weeks using a 777-200 dry leased from SIA. After the proving flights are completed and its AOC is in hand, Scoot will send its first 777-200 to SIA Engineering for retrofit.
Scoot’s first aircraft is scheduled to enter the hangar at the beginning of April and be completed by early to mid May. The second aircraft, which will not take as long to retrofit as the first aircraft, is expected to be completed by early June, allowing Scoot to launch services in mid to late June with two aircraft.
The retrofit process involves installing new economy class and recliner-style business class seats, both of which are being supplied from Germany’s Zim. Scoot is also hoping to equip its aircraft with a wireless in-flight entertainment system although it has not yet decided if it will be able to offer this from the beginning as it continues to negotiate with potential vendors over availability dates and pricing.
While in the hangar for retrofit, all of Scoot’s aircraft, which are being purchased from SIA, will also undergo a heavy maintenance d-check. Scoot has booked four consecutive maintenance slots at SIA Engineering, meaning its third 777-200 should be completed by the end of June and its fourth aircraft by the end of July. This will allow Scoot to launch two more destinations in 3Q2012.
At least one and potentially two of these destinations will be in China. Scoot is also looking at selecting one destination in Korea or Japan.
More complex Chinese regulations make it easier for Scoot to launch with Australia
Scoot decided against selecting China for either of its first two destinations partly because China prohibits foreign carriers from selling any tickets on China routes until it secures a Chinese landing permit. Scoot can’t lodge an application with Chinese aviation authorities for a landing permit until it receives its AOC. This is also the case with Australia, but in Australia airlines are allowed to start selling tickets before the AOC is secured and the landing permit application is even submitted.
There is always a risk the landing permit will not be secured in time, but with Australia the process is much more predictable and should be quicker than China or other potential Scoot countries such as Japan. Given Scoot is a new airline subsidiary from a well established airline group, rather than a completely new airline, it is a safe bet the carrier will have all the approvals it needs to launch Sydney and Gold Coast services in June.
China can be unpredictable and bureaucratic but once it receives its AOC, Scoot will immediately begin the process of securing the required approvals from Chinese authorities. Scoot should be in a position where it can announce its first Chinese destination in April or May. Scoot will still have to refrain from beginning ticket sales to China until the landing permit is in hand, which would likely not be until mid-2012, allowing for a launch of services to China sometime in 3Q2012 if everything goes smoothly.
Additional destinations in Australia are highly unlikely this year unless Scoot runs into serious regulatory hurdles in China and other North Asian countries. But the carrier could potentially add a third Australian destination in 2013 or 2014 as more 777-200s are added to its fleet.