Only the best performance cuts it at Scoot

Singapore Airlines (SIA) low-cost subsidiary, Scoot, is definitely back in business with a bang, making money and doing more flying than pre-pandemic times. CEO, Leslie Thng, is full of optimism about the airline’s future and readying for the arrival of a new aircraft type into the Scoot fleet that will service more regional destinations. Associate editor and chief correspondent, Tom Ballantyne, reports from Singapore.

December 1st 2023

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Scoot CEO Leslie Thng has no hesitation in defining the airline’s ambition. Read More » “We are committed to making sure we continue to lead the game,” he said. “We don’t want to be the biggest LCC, we want to be the best LCC. “In terms of sustainable growth. In terms of financial performance. In terms of customer service standards and being reliable and safe. From the low-cost perspective, we are not comparing ourselves to the likes of SIA, but definitely we want to make sure we set the industry standard for low-cost carriers.”

In financial terms, the carrier is profitable despite the woes of the pandemic. With its parent, SIA, recently reporting a record US$1.1 billion net profit for the half-year to end-September, Scoot itself booked a record operating profit of $110 million, a $446 million improvement from a year earlier. “That gives us confidence in terms of how we think 2024 will pan out,” Thng said.

Being part of the SIA group means Scoot has a lot of competitive advantage. “The financial strength of SIA. You will have heard my colleagues talking many times about how much cash they have,” he said.

“The impact of this is it gives us a lot of confidence internally - for the staff - as well as externally to all the OEMS (original equipment manufacturers), the lessors and partners with which we work. We have the financial ability to pay. We have the financial ability to invest. We are here for the long term.”

Speaking during the Association of Asia Pacific Airlines (AAPA) Assembly of Presidents in Singapore in November, Thng said it was all about being first off the block in the wake of the pandemic, and ‘Scooting’ into the new world.

“We have been very progressive in returning capacity to the network. We are operating to 66 destinations in Asia, Europe, the Middle East and Australia. Indeed, Scoot is doing 3% to 4% more capacity than pre- COVID in 2019,” he said.

“Mainly because we actually have more aircraft compared to pre-pandemic. We ended March 2020 with 49 aircraft. Now we are operating around 51 to 52 aircraft. Secondly, certain destinations we serviced pre-COVID, for example Malaysia, we were operating 80 times a week to eight cities. Now we are operating 10% more frequency on these routes. In Indonesia, we flew to four destinations, at around 55 to 57 weekly services. Now we are operating to 74 to 75 flights a week to nine cities in Indonesia. “

One country still lagging the post-pandemic recovery is China, an important market for Scoot. “Pre-COVID was about 25% of our capacity. Right now, we are operating about 80 times a week compared with 100 times a week to 17 destinations [2019]. So, there will still be ample opportunity for us to continue to grow within Asia,” Thng said.

Integral to Scoot’s growth will be the arrival of a new aircraft type, the Embraer E190-E2. Scoot has nine on order. Five will be delivered in 2024, starting from next March. They will join a fleet of 21 B787 Dreamliners and a mix of A320-200s, A320neo and A321neo. The E2 order deal was done in the belief, as well as confidence, that demand will continue to grow.

“All of us at Scoot are super excited about this aircraft because it does give us a lot of opportunities to expand the destinations we can serve within this region. The E2 will seat 112 passengers compared to the A320neo that has 186 seats for its LCC business model. We think the reduction in seats by more than 70 is a good fit for us to expand on to many thinner routes within the region. And again, it will help us increase destinations we are building,” he said.

Like several airlines in the region, there have been issues with some A320s equipped with Pratt & Whitney engines. In July, Pratt & Whitney parent RTX said a rare powder metal defect could lead to the cracking of some engine components and called for accelerated inspections. The checks are expected to ground 600-700 Airbus jets from 2023 to 2026. About 66% of the engine removals are scheduled this year and in early 2024. Scoot is considering extending the lease of some A320s due to these problems, Thng said. “We have some flexibility. We are exploring the extension of some leases to mitigate the impact,” he said. Scoot has 20 A320s Four affected engines have resulted in two aircraft being grounded.

Apart from its regional network, Scoot also operates long-haul to Berlin and Athens in Europe, Jeddah in the Middle East and Sydney, Melbourne, Perth and Queensland’s Gold Coast in Australia. Asked about the possibility of more long-haul flights, Thng said any potential opportunities to identify long-haul routes is not being ruled out.

“Just now our focus is on restoring some of the destinations that we do not yet fly post-COVID, but at the same time using the E2 to increase the flights we can offer in this region.”

At 48, Thng has a 24-year career with the SIA group. He was chief executive of SIA’s regional carrier, Silk Air, from August 2012 to May 2016, chief commercial officer of Scoot from May 2016 to October 2017, and CEO of Vistara, SIA’s Indian joint venture with Tata Sons, between October 2017 and December 2021. Until his appointment as Scoot CEO in June last year he was senior vice president sales and marketing at SIA.

Something he has done differently compared with pre-COVID is to build up origin-destination (OD) traffic. Thng aims to attract traffic flying to Singapore from one of its many destinations but also air travellers flying to Singapore who want to fly on to somewhere else. “The content of this OD traffic we carry has increased quite a bit compared with pre-COVID,” Thng said.

“We look at our schedule to determine how to facilitate connectivity for passengers to fly Scoot and find it convenient to fly Scoot to their final destinations. It may not be Singapore. It may be Singapore plus another city beyond. This is where we see the opportunity for us,” he said.

“The revenue part is important, he told a media briefing last month. “As I mentioned, we are trying to build up the OD traffic so we have actually invested and cut over to a new revenue management system to allow us to price as well as to sell thousands of ODs we can offer our customers. We are trying to use technology such as machine learning to optimize the auxiliary revenue part related to seat selection and when passengers need to purchase excess baggage for their travel. Internally it is important when you look at how we can enhance productivity as well as efficiency.”

‘We are a budget airline, but there is a standard we would want to benchmark. Operational excellence is important for Scoot. Being a fully owned subsidiary of SIA we can learn from SIA. SIA has been around for many years. They have fine-tuned and improved many internal processes and procedures in terms to be one of the best airlines for operational excellence from engineering to flight ops. ‘As well as internal processes we must be cost effective and efficient. We continue to learn from one another so we have the best within the group’

Leslie Thng Scoot CEO

Like his counterpart at SIA, Goh Choon Phong, Thng believes it is imperative the airline continues to leverage on technology to make sure the customer experience can be improved. “We can find opportunities to generate more revenue, but at the same time use technology to improve or enhance productivity and efficiency,” he said.

On the customer front, Scoot has been pushing boundaries. Its B787 Dreamliners have a Scoot Plus product and Scoot in Silence cabin space where children are not allowed. There are stretched seats available were customers can pay for better seat pitch. There is Wi-Fi onboard.

“At the airport, we try to be as friendly as possible by offering check-in, mobile check-in and mobile boarding passes. We are in the process of revamping our website to ensure it is more customer-friendly. We have launched M.A.R.V.I.E., a chatbot to answer simple questions from customers who may not want to go through quite a bit of waiting time to connect to the call centre.”

Scoot’s connection with SIA extends to cross-selling within the group. SIA passengers can choose Scoot destinations as their final destinations, especially customers not based in Singapore. “KrisFlyer is the loyalty program for SIA, but we continue to leverage on that loyalty program as it allows customers to accrue as well as to burn miles when you fly on Scoot. You can use loyalty miles plus some cash to buy a Scoot ticket. We are looking at making sure you can use all your KrisFlyer Miles to redeem a Scoot ticket without paying any cash,” Thng said.

Scoot continues to strive for operational excellence. “We continue to look at initiatives internally to see where we can improve on-time performance, notwithstanding the challenges that we face related to resources, related to infrastructure. We have maintained our aircraft according to the specs given by OEMs. We do regular checks. We invest in refreshing our leather seats in Scoot Plus so they have a new look post COVID. We continue to invest in cabin refresh programs. Some of the defects because of COVID, because of wear and tear we continue to invest.”

He said “we all know the price of fuel makes up the majority of operating costs”. “So it is important for us to invest in a system that could do better in terms of route planning that will save in fuel expenditure for us. We look at systems within Scoot to make sure we take an agile approach in whatever we do when it comes to system enhancement. We want to reduce the time it takes to bring the product to the market. We want to make sure we do it in phases, not in a big bang cut over for example, so that we learn along the way. The are things that COVID as well as post-COVID that have made Scoot more resilient, more agile as well as more innovative.”

And, as it is for most LCCs, staff is a key asset. “You can invest in hardware. You can invest in technology but without the staff you can’t deliver,” says Thng. “We want a dynamic and inclusive workforce. A dynamic workforce is one that will always look at process improvement. Will always challenge the status quo, not be happy with the status quo and want to improve continuously,” he said. Scoot’s office at Singapore’s Changi airport is open plan with everyone in a single space including Thng.

“The other part is the opportunity for staff to have a growth mindset. Scootitude. What does it mean? It means the passion for travel. It means connections with people as well as culture. And again, to continuously improve the processes and seek opportunities to do the best for the organization,” he said.

“Our cabin crew is called Scooties. We don’t have inflight entertainment. We don’t have the backseat screens. We believe our Scooties, our cabin crew are more engaging. They will find opportunities to engage with the customers. They will look into activities to make sure our customers are engaged during the flight with us.”

Scoot is facing challenges that are affecting the industry wide, including supply chain issues. “Unfortunately, it is not a situation where you can order today and receive it tomorrow. We make the order and then wait for the OEMs to send us the spare,” he said.

“The engagement with the different OEMs will be a continuous process. We will be engaging with them to understand their constraints and challenges. We are quite open in sharing our plans to jointly come to a landing where we could, despite the challenges, be able to receive some of what we want in 2024. It requires a lot of planning, a lot of negotiation and discussion.”

Overall, Thng said, Scoot must holistically decide the investments it must make to improve.