Malaysian long haul carrier Air Asia X has planned to scrap its unprofitable routes to Europe and India. The carrier that is planning to list itself in the near future independently from its low cost pioneer parent Air Asia, is ceasing operations to Mumbai from January 2012, while services to New Delhi, London and Paris will cease in March 2012.
The airline is citing weak European economy/reduced demand, continued high fuel prices and high airport and government taxes including 1 Jan 2012 carbon tax as the reasons for discontinuation of its services.
London and Paris were the only European destinations that the low carrier was flying and this effectively puts an end to its ambitions to fly to those sectors unless the current European crisis subsides or a decision is taken with regards to the EU carbon tax.
The airline plans to focus back on its core strengths in Australasia,China, Taiwan, Japan and Korea and also introduce new routes in these sectors to build up on its strength with taking on current long haul services from Jetstar and soon to be launched Singapore Airlines subsidiary Scoot.
With regards to India, the airlines strategy was flawed right from the start, In markets like India where low-cost carriers also use agents and travel sites to sell their capacity, Air Asia tried to go solo and bombed big time with poor load factors. The airline tried to tackle the market with its usual strategy but forgot that the Indian markets are not the usual low cost markets with the typical low cost facilities and hence suffered from high airport costs and fuel charges.
The airline plans to continue operating its remaining routes in India but with Indian airlines also moving in these sectors it remains to be seen how does it plan to tackle them.
Finally the talk of the town has become a reality, Singapore Airlines unveiled its Long Haul Low Cost Carrier “Scoot”. Singapore Airlines plans to tackle the recent onslaught of Low Cost Carriers eating up its market pie with its new offering upto 40% cheaper fares than full service carriers.
Scoot plans to begin operations in mid-2012 with 4 Boeing 777-200 purchased from parent Singapore Airlines for operating to various destinations in the booming markets of Australia and China, It aims to have about 50 pilots and 250 cabin crew by the end of next year all of whom will be hired from outside and plans to operate 14 aircraft by the middle of this decade. The airline will operate from Changi Airport’s terminal 2, offering two cabins and will eventually expand operations to India, Europe, Africa and Middle East. The airline which has a capital of S$283 million ($224 million), will spend as much as S$60 million ($47.61 million) in the run-up to the start of its flights.
Singapore Air also owns regional carrier SilkAir and has agreed to increase its stake in short-haul budget carrier Tiger Airways Holdings Ltd. to about 49 percent. So where does this new piece fits in? Well given that the airline plans to operate out of the Changi terminal 2 instead of the usual budget terminal for the Low Cost Carriers (LCC) and will be flying to long haul destinations in Australasia and China, it’s clear sign that the Singapore Airline plans to counter the growing LCC market with this offering which will then feed traffic into its full service network. In one way thats a good news that the passengers will be able to avail features like through check-in and baggage handling on the airline network and will surely be great pull for people who want to travel with a reputed brand but on a smaller budget.
But the bad news as per my understanding would be highly dense seating configurations on the planes, given that the current Singapore Airlines B777-200ERs accommodate 285 passengers, the expected config in the Scoot layout is likely to carry around 370 passengers with a 10 across (3-4-3) layout. While this kind of layout may suit well for short haul flights but for a long haul carrier, this could really turn into a deal breaker.
Scoot has setup a Facebook page and launched its website to allow people to register for updates and generate interest. What would be critical would be to see how the airline manages to live upto the reputation of its parent and what game changer strategy it employs to lure flyers.