SIA to fold Tigerair into Scoot brand

Singapore

SINGAPORE Airlines (SIA) is aiming one final bullet at the wounded Tigerair, hoping to cut costs and improve sales by consolidating the budget carrier into the better-perceived Scoot brand by the second half of 2017.

"The power of a single brand which we use to connect with our customers and to develop brand affinity and loyalty towards us, we feel that that is a much more compelling proposition compared to continuing to move forward with two brands side by side, where you will naturally be expending more energy, more effort and more resources in keeping both brands flourishing," said Lee Lik Hsin, chief executive of Budget Aviation Holdings, the SIA budget unit that controls both Scoot and Tigerair.

Scoot and Tigerair have been run through Budget Aviation since earlier this year after SIA privatised Tigerair. Together, the low-cost siblings operate a network of 59 destinations in 16 countries, comprising Scoot's 23 mostly longer-haul destinations and Tigerair's 40 mostly short-haul routes. They currently have a total of 35 aircraft on hand, 47 on order and another 11 on purchase option.

Under Budget Aviation, the two airlines shared resources such as certain administrative and operational functions, as well as route synergies. The integration is set for its next step, but it will come with more risk.

Each of the two budget carriers currently holds its own air operator's certificate, which is a licence that allows the company to run an airline and obtain slots at airports.

The plan is to integrate them under a single certificate, but doing so could affect the status of some of those slots. Mr Lee said that the group's intention is to retain all of its network and airport slots if possible.

"We have been interacting with various regulators to understand what the requirements are and what the constraints might be, and so at this juncture I would say we are fairly confident either that we will have a smooth process or that whatever issues we encounter we will have ways to mitigate around them," he said.

There are also efficiencies such as not having to maintain two separate websites and being able to schedule connections that make it worth taking that risk.

The merger will also allow the group to focus on the stronger brand. Tigerair, which was loss-making when SIA took it private, lags Scoot in market perception on issues such as comfort, safety and service quality.

The grander ambition is to better capture the potential for travellers connecting between routes within the SIA group. That will take on more importance as Scoot aims for longer-haul routes, such as the coming inaugural European service to Athens.

"When we fly to Athens, we're going to need a lot of support from Singapore Airlines from their connecting passengers as well beyond what we can support on our own with the budget network," Mr Lee said.

It remains to be seen how Tigerair's current franchise partnerships in Australia and Taiwan will be resolved. Mr Lee said the group is already in discussions with the partners on the matter.