Australia is no longer the “star” of Scoot’s expanding low cost long haul network as market conditions take their toll.
Speaking to Travel Today at the CAPA Aviation Summit, chief executive Campbell Wilson confirmed that the local market is currently “soft” from a demand perspective.
“If you had asked us two years ago, we would have probably said that Australia is the star of our network as would many other airlines, whereas now Australia is in the not-so-hot category and other places have recovered or matured," he said.
The depreciation of the dollar and a range of other economic factors have affected people’s travel sentiment, Wilson explained.
“On the flipside, there is a supply issue where a lot of supply has been put into the market over the last few years,” he said. “That was still in the process of being absorbed when the economy started slowing down, so that creates a great gap.”
However, Wilson stressed that the dip is not unusual and is “just one of those things”.
“Because the industry operates on quite low margins, it is very sensitive to smaller fluctuations on demand so what are seen as small shocks can have relatively large impacts,” he said.
Meanwhile, despite an overall softening, Australian trade sales continue to grow for the LCC, albeit off a relatively low base.
"It's easy to turn on a website and advertise to consumers, but it's a more incremental process to build interconnectivity with travel agencies and the systems to educate travel agents, to incentivise them to perform as necessary – that takes a while," Wilson said.
However, Australian direct bookings continue to trend above the global average of two thirds of overall sales, he added.
Meanwhile, there are no immediate plans for the airline to expand its Australian presence, with its focus over the coming year instead on the transition from Boeing 777 aircraft to a fleet entirely made up of B787 Dreamliners, which begins later this year.
“We receive the first aircraft at the end of November and it will be deployed on commercial service probably to Australia initially,” Wilson said.
“By middle of next year, all our aircraft will be 787s.”
The fuel efficiencies and smaller capacity of the new aircraft are likely to see Scoot add frequencies on selected routes, with network expansion likely next year or the year after, he revealed.
