Singapore Airlines to copy JetStar with a LCC

[Zeke]

SQ announced today they will be setting up a new LCC flying 2 class 777s.

And what have they decided to call the airline, wait for it......"SingStar".

What will be next, gold and silver color scheme with a big star on the tail ?

I guess imitation is the best form of flattery !!!

SIA to set up new no-frills airline - Channel NewsAsia (http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1131133/1/.html)

[Going Boeing]

I think that SQ should approach Delta for permission to use the name of Delta's failed LCC - Sing Song sounds better than Sing Star :O

[dl_88]

oh great that's gonna be a clincher.
I do hope they don't go the way of the Star. :{

I wonder how are my chances of getting in.:ugh:

[The Green Goblin]

Ummm isn't Tiger just that?

Silkair?

[1me]

Ummm isn't Tiger just that?

Perhaps it's the low cost version of the LCC!

[SMOC]

More here,

SIA to form long-haul low-cost subsidiary (http://www.flightglobal.com/articles/2011/05/25/357171/sia-to-form-long-haul-low-cost-subsidiary.html)

[denabol]

Is this going to stress the our airlines? What does it mean for the workers?

Singapore Airlines 2nd brand sets scene for consolidation | Plane Talking (http://blogs.crikey.com.au/planetalking/2011/05/26/singapore-airlines-to-join-longer-haul-low-cost-airline-battle/)

[Cost Index]

Isn't SingStar a Playstation Karaoke game? Maybe that'll be the inflight entertainment...

[DrPepz]

Oh God this is the dumbest thing I have read all year. Why on earth does SQ want to do a TG and do this? Don't they have enough subsidiaries and associate airlines without having to form YET another one?

Is the Singstar thing actually true or is it a joke?

It's not like SQ has that many aircraft on order so how are they actually going to find the aircraft for this joke of an LCC?

To me it sounds like they've run out of ideas.

Sitting on $7bil of cash, hardly any aircraft on order, and declared a dividend of S$1.40 per share - or 10% based on today's closing price. No other airline on earth comes close to offering a 10% dividend.

They should just redistribute half their market cap in dividends rather than start this silly Longhaul LCC.

[TIMA9X]

Don't they have enough subsidiaries and associate airlines without having to form YET another one? Spot on Pepz, and of course makes Qs big plans in Asia look even more confusing. Say Q Asia premium & Jetstar Asia lighter?

Sounds like one of those FOXTEL pay TV packs.:rolleyes:

[Taildragger67]

flights from Singapore Airlines' new subsidiary, which is yet to be named


...................

[neville_nobody]

They should just redistribute half their market cap in dividends rather than start this silly Longhaul LCC.

It might just be used to build a metaphorical moat around Singapore Airlines. By having a local L/H LCC it makes it harder for someone else (namely Jetstar) to come in.

Say goodbye to J* Europe. Your move Alan. :}

[TIMA9X]

It might be a reaction to Qantas Asia,
for sure for sure, or a bluff, a bit like online marketing poker, the game was started when a player at Q let the cat out of the bag, "a review of Q mainline" led by.... err someone forgettable.

[DutchRoll]

....and the race to the bottom continues.

I should've worked harder at school, but fortunately I married well.

[Sunstar320]

Clearly they are doing in threat from this...

Air Asia vies for Singapore operations - Airline News - etravelblackboardasia.com (http://www.etravelblackboardasia.com/article.asp?id=75463&nav=109)

[B772]

With Jetstar Asia preparing for operations to Europe from SIN it is not unexpected that SQ would decide to match Jetstar Asia longhaul. The new SQ offshoot is expected to use SQ B777's and B744's that are being replaced with new a/c later in the year.

Somewhere in this jigsaw puzzle is Virgin Australia who is being sponsored into Star Alliance. I would suggest QF have their hands full and starting to question the A380 purchase.

[Captain Sherm]

Thing is, compared to legacy airlines operating the B744 on long-haul routes to/from and through Singapore, a B773 configured 2 class, say 50 seats Premium Economy, 330 to 350 seats Economy is a "SLCC: Significantly Lower Cost Operation" whether or not any other costs are reduced or eliminated.

Imagine: Good IFE, classy enough in-flight service to matter without being over the top, access to SQ's FF programme, access for premium Economy pax to the SQ Business lounges etc....all backed by SIA's brand and resources world-wide and taking up all the routes not quite as suitable for the premium brand, but offering just that little bit more class and service than a bare LCC. Wow-what a product to further build their dominance.

someone once said "If you're not flying the 777, you're not serious about the airline business". Not a bad line.

[breakfastburrito]

“The closest competitor to the 777-200ER in operation today is the A340-300 – it has a range capability of 7485 nmi (nautical miles) when carrying a full load of 262 passengers, compared to the 777-200ER’s 7725 nmi with 301 passengers. When comparing these two long-range airplanes, the 777-200ER has significantly better fuel efficiency, with the A340-300 block fuel per seat being 13% higher on a typical 6,000-nmi trip. Its cash operating costs per seat on the same mission are 17% higher,” the Boeing document reads.

Indeed, in a 3,000 nm mission profile, the A340-300 burns 3.25 L of fuel per passenger per 100 kilometers, whereas the 777-200ER burns 2.89L, a 11% reduction. In a 6,000 nm mission profile, meanwhile, the 777-200ER burns 3.08L of fuel per passenger per 100 km, also 11% less than the A340-300′s 3.49L fuel burn figure.

In the meantime, Boeing says the 777-200ER compares favorably to both the A330-200 and -300 variants, albeit that they are not being compared on an “apple-to-apple” basis.

“Now, if one wants to compare a medium-range A330 with the long-range 777, the 777 still holds its own even in this apples-to-oranges comparison. Among the two A330 models, the A330-300 (262 pax) is closer in size to the 777 than the A330-200 (241 pax), which competes more directly with the 767-300ER and 787-8 (242 pax). So let’s compare the A330-300 with the 777-200ER, for a 3000-nmi mission (because the A330-300 does not have 6000-nmi range capability). The A330-300 block fuel per seat is 3% higher, and its cash operating costs per seat are 6% higher. Not as bad as the four-engine A340-300, but still not as efficient as the 777-200ER. And keep in mind, the A330-300 has around 2000-nmi less range capability than the 777-200ER, so it’s not even in the same class of airplanes,” the Boeing document continues.

In the case of an A330-200 versus the 777-200ER, the former burns 3.11 L of fuel per passenger per 100 km whereas the latter only burns 2.89L, the difference between them being even bigger than the A330-300′s 2.98 L and the 777-200ER’s 2.89L figure in a 3,000 nm mission profile, Boeing data shows.

In a 6,000 nm mission profile, the A330-200 burns 3.32 L of fuel per passenger per 100 km, whereas the 777-200ER’s figure stands at 3.08 L, a 7% reduction.

Moreover, the relative Cash Operating Cost (COC) per seat-km of a 777-200ER is 11% and 13% lower than those of an A330-200 on 3,000 and 6,000 nm missions, respectively.

Ironically enough to Airbus’ claim in its advertisement that its misleading “15% lower Cash Operating Cost (COC) per seat” translates to an “annual saving of at least $4.4 million per plane, per year”, operating an A330, regardless of its variant, is much costlier than operating than a 777-200ER, not to mention that the 777-200ER has a significantly larger revenue cargo volume which can be utilized to carry additional amounts of revenue and hence profit-generating cargoes after the passengers luggage has been fully loaded.

“In summary, there is no basis or logic to defend the ’15% lower than the 777-200ER’ claim seen in recent Airbus advertising. The only way to achieve this type of number would be to cherry-pick inconsistent assumptions and use dissimilar seating configurations to dramatically skew the results in favor of the A330,” the Boeing document concludes.
Boeing: 777 way much better than A330 (http://www.aspireaviation.com/2010/12/08/boeing-777-way-much-better-than-a330/).
(This article is worth bookmarking, as it has many good stats on various burn scenario's)

Sherm, recent information passed to me indicates the A380 is around 4+ litres/100Km per seat for a 6000nm sector. It is somewhere in the vicinity of ~5-8% lower burn compared to the 744, but without more data it is difficult to compare exacty. Suffice to say, the B777 appears to be ~30% lower fuel burn per seat compared to both the A380 & the 744. What was that you said...
someone once said "If you're not flying the 777, you're not serious about the airline business".

[SMOC]

It's not really a balanced article when.....

Data provided by The Boeing Company


No doubt the 777 is a great machine particularly the -300ER but the number of 330 sales proves it's the A/C of choice vs the -200ER.

[Captain Sherm]

Haven't got the manuals in front of me but back of the envelope plus a little Excel suggest that a B777-300ER over 6,000 nm with 375 seats would run out at about 3.1 litres per seat/100 km.

There's lot of caveats in making these comparisons of course, but I think that figure is roughly about right. And all the more awesome for a classy LCC (yes it can be done!!) if you take into account the added fact that in running such a fleet that it would have the marginally costed support of SIA's vast worldwide capabilities in training, logistics and engineering and that B777 and the GE engine maintenance costs have roughly the same saving as as a % of the 744 as do fuel costs. It truly is the machine of choice for the discerning fleet planner. Or even one who is not quite the sharpest chisel on the tool-bench.

One can only speculate how a major Australian flag carrier would be performing with say a 20 aircraft fleet of B777-300ER's now, 2 class config and plus a handful of 200LRs to do the really mind-numbing stuff like SYD-JFK, SYD-ORD, PER-LHR etc. Maybe Virgin will show us in stark detail, just how exquisitely true for QF is this, the most horrible of phrases:

"For all sad words of tongue or pen, the saddest are these "it might have been."

John Greenleaf Whittier (1856)

[breakfastburrito]

SMOC, you have a point, however, it is extremely difficult to get publicly available data, airlines seem very reluctant to release information to make valid comparisons. Perhaps you could point us to an independent source of information.

In the absence of such information we have to make do with the manufacturers data & our own detective work to get a ballpark estimates. In any case all twins outperform quads in terms of fuel burn. There may be certain sectors for which the a four engine is the optimum aircraft (slot restrictions was the Airbus logic for the 380), however, for almost any other sectors twins appear to have significant cost saving.

Sherm's B.O.E calculations seem to agree quite closely with the Boeing data.

[Fatguyinalittlecoat]

I think Singapore can smell blood (Qantas labour relations looking likely to kill it, Jetstar admitting it doesn't actually make money, etc....).
They are going for the jugular to rid the world of Qantas and it's subsidiaries for good.
Payback.


Oh S@#t. :eek:

[standard unit]

Yes, looks like game, set, match to me.

[SMOC]

breakfastburrito,

Sorry I don't have any independent data and agree, no doubt any data provided by Airbus will favor them.

With only Airbus and Boeing competing without the likes of McDonald Douglas Lockheed & Convair etc and with accountants running the show I honestly believe the two don't compete head to head except perhaps for the the 737 & A320, probably due the the shear number of A/C of that size in the market.

Sure there's some overlap but it's usually not optimal.

I wish engineers ran the show as they would compete head to head and that would be interesting.

[Metro man]

There's a bit more to it than just fuel burn, whilst a B777 could be ideal for airline "A" , an A330 may be the better aircraft for airline "B".

Extra range may not matter if all your routes are comfortably inside the lower figure. Fleet commonality may lean towards one manufacture rather than the other, as could maintenance support. Availability may be a consideration if you need it now instead of two years time. Attractive pricing could be offered if a manufacturer is keen to break into a new market or meet sales targets.

Betamax was a better system than VHS, but lost out in the end.

[Taildragger67]

Well, SQ have both - so they clearly see a niche for both.

Or were the A330s part of the A380 deal... ?? :hmm:

On another point - why won't Qantas order 777s? Can't afford them? Admission of error? It's not as if the order book's closed.

[Zeke]

Suffice to say, the B777 appears to be ~30% lower fuel burn per seat compared to both the A380 & the 744.

These stupid numbers from Boeing often come from using the maximum 2 possible class configuration, for the -200 it is 400 seats, for the -300 it is 451 seats. In reality this is not representative of any configuration flying today by any airline.

The CEOs of both Singapore Airlines and Emirates have both stated that the A380 burns 15-22.5% less fuel per seat compared to the 777-300ER. Their comparison is using their real world seating configuration, on their route structure.

The 777-300ER has a lower fuel burn per seat than the 777-200/200ER.

They CEOs should know, they operate both.

Well, SQ have both - so they clearly see a niche for both.

SQ are in the process of replacing the 777-200s with A330s, one of the reasons that this LCC is possible, SQ is getting rid of their 777-200s.

On another point - why won't Qantas order 777s? Can't afford them? Admission of error? It's not as if the order book's closed.

They ordered Boeing new generation widebody twin, the 787. It is not their fault that Boeing was unable to deliver them years ago when they should have started showing up.

[Groaner]

Of course, there's the question of whether Airbus or Boeing figures are accurate - your mileage may (literally) vary.

And ignores purchase costs, mx costs, reliability, expected life etc etc

[WalterMitty]

Hang on there's something wrong there. according to world's best practise at Qantas, one should always give the newest a/c to the LCC part of the group. I don't know how SQ make such large profits and have so much money in the bank with such incompetence,let alone pay a 10% dividend. I think they really should call in Boston Consulting, or better yet Bain & Co., then they'll easily be as successful as Ansett, which all students of airline management should aspire to.:eek:

[DrPepz]

WalterMitty: I posted this in another forum and will cut it here


SQ has been for the past decade chasing yields that will never ever return to the industry. In 1994, they had revenues of S$5 bil and expenses of S$4 bil - and a profit of S$ 1 bil - profit margin 20%.

Today - they have revenues of S$15 bil and expenses of S$14 bil - and STILL a profit of S$1 bil - profit margin in the single digits.

This is why SIA's market cap has been stagnant for 20 years. Well, 20 years ago they were a huge airline and pioneered many things. Today they're just so conservative and don't know what to do except put big seats in J Class.

They are sitting on piles of cash (S$7 bil) and don't know what to do with it. Not many aircraft on order, no investments...... So what did they do this year? They announced a dividend of S$1.40 - which based on today's share price is a dividend yield of 10%. No airline on earth has come close to offering such a dividend yield. So basically they just want to redistribute their cash to shareholders, and use whatever remaining cash left to put into this silly longhaul LCC.

The only companies on the Singapore Exchange offering high dividend yields are those with no growth prospects. Companies like SIngapore Press Holdings, which publishes the Straits Times, and Starhub, a local telco. For SIA's shares to be placed in the same category as those two companies is very sad.

This shows that they have really, really run out of ideas. They built up so much cash from the management of 20 years ago, and have no idea what to do with the money. They have nothing on order (don't speak about the 787s and A350s because they're just replacing the A330s and 777s one for one) and their overseas investments have largely failed.

The new business class may be a fantastic product - but what's the point of having 42 J in the 77W when EK fits in at least 20 more seats? And it's not like SQ's J fares on that product are any lower than EK's. EK's 77W can fit in 100 pax more than SQ - allowing EK much more leverage to discount.

And if this wonderful move was to "kill" Jetstar Asia's longhaul plans - for goodness sake - Jetstar Asia is doing a fine job of killing itself and sapping money from QF without SQ having to set up yet another airline.

No aircraft on order and no growth strategy - yet all the analysts and investment banks have been upgrading SIA to the moon for the past few years. Perhaps it's because of the $7 bil they are sitting on. But that's not a result of the current management, or even the previous management under Chew Choon Seng.

[rodchucker]

The actions of SQ speak louder than any words and I think the Rat may soon regret even contemplating pissing in their backyard.

Never thought I would ever say/think it, but sometimes market forces do bring some justice.

It is time that this bunch of "smartest guys in the room" with all their consultants got what they deserved. It is unfortunate that the staff will suffer with them with not a thought from the elite few.

TG hit the nail on the head, but this lot have an agenda that they are pursuing with little if any regard for those that count and who made the place what it used to be.

I wish there was another way but negotiation requires two willing parties.

[struggling]

Agree Rockchucker, all involved need to back an all round change of tack. No amount of industrial action will trump the game changing strategies now on the table.

IMHO, the answer is the consolidation, not fragmentation of the world’s legacy carriers.

Out with the old and in with the new.

[Sheep Guts]

The SQ A330s were a sweetener due to the A380 delays. And they were offered to Tiger Airways twice in the past I believe. But unfortunately they, "Tiger" stuck with their Ryan Air model ( which is being busted incidentally with Ryan Air's A320 orders) and their capacity being scaled down first time ever.
Not sure if this will work, maybe the start of something else. Maybe Tiger could be swallowed up, or up for a make over itself, lets see.
With Tiger lack luster profits and performance in Australia especially 3 years in the red according to smh. SQ wants to have safety net ready.;)

[HF3000]

Zeke: They ordered Boeing new generation widebody twin, the 787. It is not their fault that Boeing was unable to deliver them years ago when they should have started showing up.Yes, it was their fault. Where was their contingency planning? Where was their due diligence? Where, for heaven's sake, was any form of business sense which is what they are supposedly paid the big dollars for?

Everyone could see that the Boeing timeline for 787 design, testing and delivery was ridiculously optimistic. Plenty of people on this forum said so - going way back. It didn't take a rocket scientist to see that significant delays would be highly likely - if not a certainty.

Plus, they'd already just been through it with the A380. If that wasn't enough to arouse their suspicions about 787 delivery I don't know how hard they have to be hit in the face with a wet fish to get the message.

[jarden]

CAIRNS has been tipped as one of the destinations of Singapore Airlines new international low cost carrier.
Singapore Airlines plans to establish a no-frills, low-fare airline operating wide-body aircraft on medium and long-haul routes.

The new airline is seen as a competitive threat to Jetstar and Air-AsiaX expansion plans as well as a way for SIA to expand its significant presence in Australia.

SIA has yet to announce the name, fleet type or network details of the proposed wholly owned subsidiary but Macquarie Equities analysts Russell Shaw and Sam Thornton said Cairns, as well as the Gold Coast and Perth, would be among the destinations.

Tourism Tropical North Queensland chief executive officer Rob Giason said it was good news and would not only open up Cairns to Singapore and China but to European travellers as well.

Singapore is the major hub for SIA and its flights to Europe as well as to mainland China.

Cairns Airport business development manager Rob Evans said the news was welcome and the airport would arrange a meeting with the new airline as soon as possible.

He said the airport had been lobbying Jetstar for sometime to fly direct to Singapore and this gave the airport a new option.

“Singapore is a very important hub for us and we’ll be presenting a very strong business case to them (SIA),” Mr Evans said.

He said now the airline was using a low cost carrier model and targeting leisure travellers it would make their case stronger.

The analysts said the move increased low-cost competition in Asia and with Singapore-based Jetstar Asia in particular.

They said there had been media speculation the new airline would use some of SIA's 35 Boeing 777-200ERs but they believed they were more likely to use A330-300s, which were better suited to five- to nine-hour flight sectors, with an ultimate move to more efficient Boeing 787s and Airbus A350s.

The analysts said it was possible the new airline would enter the Australian market, potentially opening up new routes such as the Gold Coast and Cairns.

Australia is a major SIA market. It flies 92 services a week into five Australian ports and last year accounted for 9.2 per cent of the international market.

The carrier also has a significant stake in ailing low-cost domestic airline Tiger Australia, which could provide feeder traffic to the long-haul product. Tiger flies daily between Cairns and Melbourne.

The airline said operations were expected to begin within a year and the new carrier would be operated independently and managed separately from the full-service flagship.

“We are seeing a new market segment being created and this will provide another growth opportunity for the SIA Group,” SIA chief executive Goh Choon Phong said.

“As we have observed on short-haul routes within Asia, low-fare airlines help stimulate demand for travel and we expect this will prove true for longer flights.”
Singapore Airlines to introduce low-cost carrier with route to Cairns- Local Cairns News | cairns.com.au (http://www.cairns.com.au/article/2011/05/28/166561_local-news.html)

[ZQN]

Tiger International using A330?