Cheap and cheerful’s working so far for Scoot
24/07/2012 by WiT


Six weeks after Scoot first’s flight and CEO Campbell Wilson is looking a tad more relaxed than when I first interviewed him in March.

That time, he was fretting about making sure he got the AOC and his airline up in the air in time for the school holidays for both Australia and Singapore. This time, he’s thinking more of how he can improve on processes and inflight service.

“As with any business, although we are comfortable with who we are, we won’t be standing still.”

Recognising that it’s still early days, Wilson said he and his team have been gratified by the feedback thus far. “People like our aircraft, service and the value we provide. People who haven’t had the opportunity to travel to Australia and Singapore previously are enjoying our fares.”

Indeed, a Sydney friend recently flew over on Scoot for a weekend, paying about A$300 for a return. “This makes Singapore accessible for weekends and for Australians, seven hours is a short flight,” she said. “The only thing I will remember next time is to bring a blanket.”

Wilson said they’d been surprised by the uptake. Load factors are substantially higher than forecast. “We were expecting well over 75% but we are doing over 80%,” he said.

They’ve seen a good cross-section of customers but he expects the mix will change with the end of the school holidays.

The other surprise is the volume of passengers connecting onwards from Singapore. “At the moment, we are not working with any carrier but we could work with other similar-minded parties to make things easier for our customers.”

Having said that, he is aware of the fact that interline agreements carry additional costs and that’s something Scoot is determined to avoid so that it can continue offering “cheap and cheerful” fares.

“It shows the power of the Internet. The opportunities are there for people to look and book and it emphasizes the value of Singapore as a hub. There are 220 cities served out of here, and everything is effectively under one roof.”

While Scoot operates out of Terminal 2, it helps that Terminal 1 has also completed its upgrade and the new facility resembles more like a garden city than an airport. A total of S$500 million went into its makeover which revolved around the theme of a “Tropical City”. About 22,000 sqm have also been added to the building, bringing the total floor space of T1 to about 308,000 sqm.

With budget airlines now accounting for almost 30% of Changi’s traffic, there are moves by the airport to see if passengers can connect seamlessly between a low cost airline and a full service carrier.

Said Wilson, “Anything that makes passengers’ life easier is welcome and anything that involves complexity, costs and risks is not. We may be prepared to do it on an opt-in basis, we shouldn’t have to pay for something we don’t want or need.”

On ancillaries, Wilson said the airline was hitting targets “but that’s not so surprising because of the sector length and our efforts to make it easy for people to order pre-order meals or inflight meals.”

Scoot’s aim is for ancillaries to contribute 20% of revenues.

Sales have been largely web direct but indirect distribution is being activated. Its travel agent channel has been open since late June and GDSs will cut over soon, with TravelSky the first to activate.

“Rate parity is important to us. Travel agents can package our fare or sell it with a service fee. They can connect with us through an API link. If they go through a GDS which charges a segment fee, we will charge the segment fee on top of the fare. If travel agents see value in using a GDS, then they can either absorb the cost or pass it to the consumer. ”

Wilson said social media’s done well for Scoot which has built up a strong network of youth advocates on Facebook. “We had 70,000 fans before we even sold a ticket and now we have more than 130,000. Social media is essential to Scoot, not an afterthought.” Scoot is also active on YouTube, and its other social channel is a blog.

Post-launch, the airline has added customer response to its Facebook page and is facing similar challenges as other airlines when customers post negative comments. “I think you have to be careful and not pay too much attention to the squeaky wheel. The silent majority is very agreeable and it’s the outlier that tends to post the negative comments – also the silent majority will moderate the conversation.”

He’s yet to be convinced of the value of Twitter, saying “a personality-based” channel has absolutely no interest to him. And while he acknowledges that mobile cannot be ignored, “all the search shows that people are not using it to book tickets yet”.

Scoot currently flies to Sydney, Gold Coast and Bangkok, the latter due to aircraft utilisation. It will fly to eight destinations by year end, including Tianjin by late August, and Taipei.

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