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Singapore’s Scoot Expecting a Rapid Recovery Once Travel Returns
For the last couple of months, the airline industry has experienced a major travel boom as vaccination rates increase and governments ease entry requirements. This has been particularly evident in the United States and Europe, where fully inoculated people can travel with little or no restrictions.
Unfortunately, this is not true for many other parts of the world. Specifically, Southeast Asia has been experiencing a resurgence of covid cases, forcing some countries to reinstate lockdowns and airlines to cut service to high-risk cities.
The sluggish vaccination rate is mostly to blame for Asia’s slow rebound. But places like Singapore have experienced a steadier rollout, prompting budget carrier Scoot to expect a quick recovery in the leisure market.
Scoot Preparing for Leisure Boom
Singapore Airlines’ budget carrier Scoot is preparing for a surge in leisure travel as vaccine rates hasten in the region. According to CEO Campbell Wilson, the company is proactively putting aircraft back into operation as it awaits a spike in demand, even though the number of planes in service is more than needed for the current flight schedule.
Wilson told Bloomberg in a briefing, “We currently have more aircraft than would normally be required by the schedule that we are operating, rotating through flights so we’re keeping them warm. That ensures that the lead time in order to put them back into more regular service is very, very minimal.”
While it may be premature optimism, Singapore has maintained one of the strongest vaccine rollouts compared to its neighbors. With 36% already vaccinated, the country’s goal is to inoculate two-thirds of its population by Aug. 9 – the country’s National Day. To some this is a pipe dream, but the nation has already implemented plans to accelerate the rollout to reach its ambitious August goal. However, success relies on a few factors, like vaccine supply and people’s willingness to get the shot.
Nevertheless, Scoot believes it will see a big jump in flying in the coming weeks. Currently, the airline is carrying just 17% of pre-covid flight loads to 26 destinations, down from 68 previously. However, it expects to increase to 23% by July and then see moderate, steady growth after that. Of course, this depends on easing travel restrictions and higher vaccination rates in Singapore and other countries in the region.
Optimism Over “Green” Countries
Most tourists flying to Singapore have to quarantine for 21 days, except those coming from a handful of “green” countries, including Australia, Brunei, mainland China, New Zealand, Taiwan, Hong Kong and Macau. According to Wilson, India, Australia and China are Scoot’s largest markets, accounting for more than half of the airline’s pre-pandemic passenger load. Scoot is likely expecting leisure demand to increase significantly to and from Australia and China, though travelers from India are still barred from entering Singapore.
Until India gets its recent Covid surge under control, increased demand is improbable. However, Scoot is hoping that vaccination rates in both nations will improve in the coming months and Singapore can reopen to Indian travelers.
Singapore Prime Minister Lee Hsien Loong spoke about reopening at a conference last week. He explained, “As long as our population is mostly vaccinated, we should be able to trace, isolate, and treat the cases that pop up, and prevent a severe and disastrous outbreak.”
Airbus A321neo Opens New Route Opportunities
In addition to heightened demand from travel bubbles, Scoot recently became the newest operator of the Airbus A321neo aircraft, opening the door for new routes. On Monday, the airline flew its first A321neo flight to and from Bangkok, Thailand and plans to use them for routes to Cebu, Phillippine and Ho Chi Minh City, Vietnam, from August.
The plane, which is configured in a single-class layout, can carry 236 passengers – 50 more than the A320ceos and older-generation A320neo aircraft – and fly for up to six hours, compared to only five on older A320s. Furthermore, the aircraft is highly efficient, burning 5,000 fewer tonnes of carbon dioxide and emitting 50% less noise. Wilson explained how the new plane opened discussion for new routes that were previously implausible.
He said, “The A321neo aircraft offers additional capacity and range, unlocking new network growth possibilities for Scoot while enabling us to elevate the passenger experience in a commercially viable manner.”
He continued, “The aircraft confers us this opportunity to expand the footprint and bring new things to the Scoot network that we have not been able to do before.”
While the delivery of the jets is promising for the airline, using the A321neo is a possibly risky strategy. According to aviation analyst Brendan Sobie, Scoot has been using wide-body jets to carry more cargo to offset weak travel demand. However, he explained that the A321neo is excellent for high passenger demand but “isn’t the ideal aircraft for a scenario with low passenger numbers yet high cargo demand.” So, for the aircraft to be economically viable, Scoot has to be confident that travel will rebound soon. And when it does, it’ll be a speedy recovery.
According to Wilson, the carrier is expecting just that. He said, “What gives us confidence is that when we look at parts of the world where regulatory constraints have been removed, we have seen that travel has recovered very fast. So as and when the constraints on travel have been removed in this part of the world, we expect a similar trajectory.”
For now, Scoot should be cautiously optimistic, especially as experts warn of another covid wave this fall if vaccinations in many countries stay at a glacial pace. However, the A321neo is one of the best as far as cost per seat mile, so once travel does return, Scoot should be in a good position for network expansion and profitability.
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