Cheap and cheerful, channel agnostic, that’s Scoot
27/02/2012 by WiT


For someone who’s about to get a new airline flying within the next few months, Campbell Wilson looked fairly relaxed when I caught up with him in Scoot’s office at Changi Terminal 1.

But the New Zealander confessed to having sleepless nights with each night thinking about different things. For example, at the time we met, evacuation tests were due. The Boeing 777-200 that Scoot is using has 402 seats versus the 323 on Singapore Airlines, thus different evacuation rules apply.

“These are all critical items that if not met will push back the schedule. There’s also retro fitting for the aircraft which is a big task for a well-established airline let alone a new one.”

Scoot can of course take comfort in the fact that it is not alone in the world – it does have the big, protective wings of its parent, Singapore Airlines.

While the airline will operate independently and this is something Wilson stresses, it will tap on common resources in such areas as fuel hedging, engineering, maintenance and some technical aspects of flight operations.

Of the total 300-plus staff it will have – 45 in corporate, 51 pilots, 220 cabin crew, only 11, including Wilson, are from SIA. The positions of flight operations, safety, engineering and finance were filled with executives from the parent airline.

“Technically, you could say we are not starting from zero but definitely from a low cost model, we are,” said Wilson, who joined the airline in Auckland fresh from university and worked up the ranks the last 15 years.

Can someone who’s worked for SIA for so long be completely independent of the parent? Asked how obedient he was as a child, Wilson said, “I was a good child, I listened to my parents but not to a ridiculous degree. And I suppose, after 15 years, I did gain a reputation of doing my own thing.”

He spent most of his career working offshore (Australia, Canada, Hong Kong and Japan) which he said allowed him to act and think like an entrepreneur.

He was offered the opportunity to head up Scoot a year ago. “It’s such an exciting business model. The medium to longhaul low cost model is just beginning to develop, so lots of opportunities in virgin territory, plus I get to do it with the support of the world’s strongest airline.”

As Wilson explains it, Scoot’s purpose is to build incremental business for its parent Group. Its mission is flights of between five and nine hours from Singapore. Sometime mid-this year, it is due to launch its first flight to Sydney, a coveted destination. (AirAsiaX, the Malaysia-based low cost longhaul airline, has also announced flights to Sydney.)

“Yes, it’s a competitive route but where isn’t these days? Budget travel has gone from zero to 26% of Changi’s traffic in the last five years, it’s a market you can’t ignore and it’s enlarged the pie for everyone. Evidence has shown that low cost, medium haul works.”

Scoot has also announced its second destination as Australia’s Gold Coast and it is eyeing up to five points including China.

Pointing to AirAsiaX’s withdrawal of London and Paris flights effective end March, Wilson said, “I don’t know what prompted them to fly to London and Paris with that aircraft (A340-200). I agree that longhaul at current fuel prices is tough – every airline has announced dips in profits due to fuel costs but fuel prices tend to be cyclical.”

Wilson also believes that the term “low cost” has become a misnomer. “At the end of the day, can you charge enough per seat to cover your costs? The competition is at three levels – tier one legacy carrier non-stop, (relatively few) second tier non-stop and one-stop via somewhere else. We believe we can offer an alternative non-stop at cheaper than or equivalent to the second tier level. And if we allow customers to customize their product, it will be an attractive proposition.”

Currently, he said, if you flew shorthaul, you only had one choice. You bought a seat and you add on the extras. With medium haul, there are more options. “What I could offer is three products but with a one-click choice, so you don’t have to force customers through the process of adding extras.”

He estimated that ancillaries, in time, could come up to between 15-20% of Scoot’s total revenues.

Unlike other low cost airlines that started with a clear direct booking strategy, Scoot will be channel-agnostic. “I don’t understand why you’d want to ignore one channel over another. We will provide the same fares to the travel agent that will be available on our website. If the travel agent chooses to book via a GDS because of the integration of their backend system, they will absorb the GDS fee.

“I think the antagonism between airlines and agents is historic but reality has started to enter the debate. Travel agents cannot ignore 26% of Changi’s business and low cost airlines cannot ignore them. We won’t offer upfront commissions but if a travel agent says, I will commit 10,000 tickets, I would reward him for that. I don’t expect anyone to work for free and it’s a business at the end of the day.”

Mobile is currently not a priority. “The evidence for people purchasing via mobile is very weak,” he said.

The priority now is to get Scoot off the ground, hire people with “Scootitude” and deliver a brand promise that’s about being “cheap and cheerful”.

Asked to define “Scootiude”, he said, “Big smile, big personality, engaging.”

Its recruitment ads have certainly caught attention. It received 3,000 applications and are looking to hire 220. Training is being conducted by a psychologist/trainer who’s teaching them how to read people and pick up on non-verbal cues. “They have to earn from selling and it is important to understand human behaviour,” said Wilson.

The airline’s also been active on Facebook, gathering nearly 45,000 fans, and running competitions to win premium class tickets on its first flight.

Asked what personality he wanted Scoot to have, Wilson said, “Cheap and cheerful. Just because people pay cheap fares doesn’t mean you don’t owe them respect. Personality has to be embedded in the service.”

He said that he has been pleasantly surprised by the quality of talent in Singapore. “People are so much more relaxed these days, it was hard to get people to loosen up before but now it’s changed.

“There’s been a transformation of Singapore the last eight years and we are at an inflexion point where there is still lingering respect for authority and work ethics and a more open environment to speak your mind and act on it. It’s a nice balance.”

Asked if he’s found to hard to let go of the SIA mindset to run a new business model, he said, “I think it’s easier to unlearn than to learn. It’d be harder for a low cost person to cross over to legacy than the other way round, at least I think so.

‘“In many ways, the purity of the model is liberating – does this make profit on its own? You don’t have to ask things like, does this have a halo effect on your brand or anything like that.”

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