Booking an economy seat on a Singapore Airlines (SIA) flight may be harder in future, as the premium carrier takes a back seat for Scoot, its budget arm, to climb higher.

In just five years, Scoot, which operates medium-and long-haul flights, has not only overtaken the group’s regional arm, SilkAir, but is also already about a third as big as SIA in the market for economy flights, in terms of the number of seats offered.

According to industry consultancy OAG, Scoot will this year offer close to 7.5 million seats – more than three times the seats it offered in 2014 – while SilkAir will grow by about 25 per cent to just over six million seats. SIA, on the other hand, will see its inventory shrink by about 3 per cent from 2014, to 21.3 million seats this year.

The capacity adjustments are part of SIA’s overall strategy to deal with intensifying competition on all fronts. Scoot, with its much lower cost base, for example, is better suited than SIA to take on rivals in the economy and low-cost market.

This does not mean, however, that the premium carrier is not competing in the economy segment, SIA’s chief executive officer Goh Choon Phong has said repeatedly.

When the airline unveiled new seats and other in-flight products for its Airbus 380s earlier this month, it also revealed that the superjumbos will be retrofitted to add more seats in the premium economy and economy cabins.

But its focus is clearly on the premium sector, in particular, business class, say market observers.

While SIA has cut back on economy seats since 2014, the number of business class seats grew by about 5.8 per cent during the same period. The revamped A-380s will also feature a first for SIA: A full-length divider between centre business class seats which can be converted into couple seats.

Ultimately, airlines make capacity decisions based on market conditions and the segments they want to pursue, analysts said.

DYNAMIC

Changes in each airline’s capacity reflect a mix of their current growth ambitions and how they are adjusting to the changing market.

MR MAYUR PATEL, OAG’s regional sales director for Japan and the Asia-Pacific.

For example, SIA and many other long-haul carriers are expanding their premium economy cabins to attract customers who do not want to pay for business class but are prepared to pay for a better experience than what they would get in economy class.

“It is certainly a global trend,” said Mr Mayur Patel, OAG’s regional sales director for Japan and the Asia-Pacific.

While Middle Eastern carriers have so far stayed away from this segment, it will not be for long.

Said Mr Patel: “Changes in each airline’s capacity reflect a mix of their current growth ambitions and how they are adjusting to the changing market.”



Source link