June 4th, 2012
06:58 AM GMT
Editor’s note: Outlook is CNN's in-depth look at business climates around the world. To August 12, 2012, we’re focusing on Singapore.
Asia’s latest discount airliner takes to the skies Monday, with its inaugural flight from Singapore to Sydney.
Launched by Singapore Airlines, no-frills Scoot has already sold more than 100,000 tickets, according to The Straits Times. In its first year, it will offer flights on four Boeing 777 aircraft, linking Singapore with nearby countries, including Australia and China. Currently, tickets are available to the Australian cities of Sydney and Goldcoast, as well as Bangkok and Tianjin, China.
Scoot is expected to eventually offer medium and long-haul flights to destinations in Australia, New Zealand, the United States, and Europe.
Its launch is a bold move, especially at a time when legacy Asian airlines are struggling to turn a profit amid cut-throat competition and soaring fuel prices.
Its parent company, Singapore Airlines, reported a SG$38.2 million (US $29.6 million) loss for its January-March quarter.
Last month, Hong-Kong based Cathay Pacific halved its earnings estimate for 2012 to HK $2.03 billion (US $261 million) and reduced it by 30% for the following two years.
Australia’s Qantas announced two weeks ago that it will cut 500 maintenance and engineering jobs, following an 83% drop in its H2 2011 earnings. Its domestic and international operations will also be split into individual business units as part of a five-year turnaround plan.
Scoot’s take-off will also heighten competition between emerging low-cost carriers in the region, often launched by legacy airlines themselves.
Ticket sales opened on May 30 for AirAsia Japan, a partnership between Malaysia’s AirAsia and Japan’s All Nippon Airway, which is offering budget airfares for domestic Japanese flights from Tokyo. AirAsia Japan plans to add international flights by the end of the year.
Jetstar Japan, partially owned by Qantas and Japan Airlines, will launch new month with discount domestic flights.
They will complete with Japan’s first domestic low-cost carrier, Peach Aviation, launched last year by All Nippon Airways. Peach began a route from Osaka to Seoul last month and will add routes to Hong Kong next month and Taipei later this year.
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