Closer integration between SIA, Scoot, TigerAir a “natural evolution”: Lui Tuck Yew

SINGAPORE – Travellers may soon have better connectivity when using Singapore’s full-service and low-cost carriers.

In an interview with Channel NewsAsia, Transport Minister Lui Tuck Yew said closer integration between Singapore Airlines (SIA), Scoot and Tigerair is a “natural evolution” to improve convenience and service offerings to passengers, which may include facilitating movement of luggage from one airline to another.

The aviation industry has been hit by slow growth over the last 12 months. The political uncertainty in Thailand, and the tragic incidents befalling Malaysia Airlines MH370 and MH17 have all been contributing factors affecting the movement of passengers, especially those from China.

Airlines are also consolidating, scaling back capacity after growing rapidly. To improve connectivity and convenience for passengers, the Transport Minister said it makes sense for Singapore’s different carriers to work closely together.

“You see passengers booking different legs all on their own, because you just use the Internet, you go in, you book one leg on Tiger, and you book another leg on Scoot,” he said. “You want to be able to facilitate that connection for the passenger. You need to be able to reshape some of the offerings that you can put on the platter to different groups of travelers, simply because some of these travel patterns have emerged as a result of the proliferation of the different types of airlines and the fact that we are penetrating more destinations.”

TIGERAIR, THE WEAKEST LINK: ANALYST

However, such integration may not be easy. At least one analyst believes Tigerair is the weakest link in the integration strategy. The short-haul budget carrier suffered losses amounting to more than S$180 million, and had to be rescued by parent company SIA.

SIA has committed S$140 million, increasing its stake in Tigerair from 40 per cent to as high as 71 per cent.

Said Shukor Yusof, analyst at Endau Analytics: “With SIA, they are banking on the combination of Scoot and Tiger. In between, you have SilkAir to be streamlined as revenue generators to the parent company, which is SIA, the mainline company. I think the weakest point is Tigerair. It presents many challenges for the group, because of its inherent weakness in the market place. I see very little upside for this airline.

“Unfortunately, the market is so full of many stronger low-cost carriers, with AirAsia, Malindo, Lion Air and various others in ASEAN alone, and Tigerair was late to the game. A lot of the markets that they have tried to penetrate have been taken by others as well.”

CHANGI AIRPORT - AN IMPORTANT AVIATION HUB

Singapore carriers can take comfort that Changi Airport remains an important aviation hub and the Government must ensure Changi Airport continues building on its position.

Said Chairman of the Government Parliamentary Committee for Transport Cedric Foo: “Whether it is a Temasek-owned company, or otherwise, should not matter, because our ultimate objective is to ensure that Singaporeans and visitors to Singapore have access to the best possible airlines and travel options.

“I think that should be the way, and we should be clear about what our Government objectives should be. We want to make sure that Changi is welcoming, we want to make sure that we negotiate with other governments for more air services agreement, more flight freedom, and I think the ‘open skies’ concept is something that would work well for us, and we should negotiate hard for more open skies within ASEAN, and beyond.”

The outlook for the aviation industry in 2015 is that of less turbulence. ASEAN carriers are looking forward to the implementation of the open-sky policy, allowing them to fly freely across the region to any airport, as often as they want. Oil prices are also expected to continue trending downwards, benefiting carriers and passengers. CHANNEL NEWSASIA