Singapore Airlines has decided to consolidate its two low cost carriers, Tigerair and Scoot into one airline which will continue under the better-perceived Scoot brand.
The merger, which includes repainting Tigerair's planes in Scoot's colours and getting the necessary approvals from regulators in Singapore and other nations the airlines fly to, is expected to be completed in the second half of next year.
SIA last week announced an almost 70% dip in profits for the July to September quarter, resulting in a net profit of S$64.9 million (US$46.8 million), with industry-wide competition and a
capacity glut continuing to erode the carrier's pricing power on both the passenger and cargo fronts.
Apart from declining passenger revenues and yields, SIA Cargo also continued to struggle. Although cargo volumes increased 8.2%, cargo yield fell 15.7% due to excess capacity in the market. SIA Cargo reported a S$11 million operating loss,
S$8 million more than a year ago.
The decision to move the LCC operations to one brand comes less than six months after SIA announced in May that it had set up a new company - Budget Aviation Holdings - to own and operate both Tigerair and Scoot.
Coming together as one brand under a single operating license makes sense, Goh Choon Phong, SIA's chief executive and chairman of the new entity said. He said: "The integration (in May) has already led to commercial and operational synergies between Scoot and Tigerair that are providing growth opportunities for both airlines. "Following a review, we have determined that the logical next step is to pursue a common operating license and common brand identity to enable a more seamless travel experience for customers," Goh said.
It is not clear how the merger will affect Tigerair Taiwan, in which Tigerair Singapore owns 10%, and Tigerair Australia - a former subsidiary now fully owned by Virgin Australia Holdings.
Nol van Fenema