Singapore Airlines has announced that it is expecting to transfer some jets from its regional wing SilkAir to low-cost carrier Scoot, allowing it to compete more effectively against low-cost rivals in the region, like the AirAsia Group.
The plan comes after the carrier announced last month it would absorb under-performing SilkAir into the parent brand after 2020 when a programme to upgrade cabins at a cost of more than S$100 million gets underway.
In a press release on Thursday (21 June), the airlines stated that it expected to transfer some of SilkAir's 737s to Scoot to help optimise the overall group's network, however, it declined to provide further details such as the number of planes involved.
Singapore Airlines has already transferred routes to five destinations in South-east Asia from SilkAir to Scoot as part of the transformation programme.
Chief analyst at the CAPA Centre for Aviation, an independent aviation research firm, Mr Brendan Sobie, said that those destinations, which include Kuching and Langkawi in Malaysia, had a relatively low proportion of traffic transferring through the Singapore hub relative to other routes.
Last month, the airlines stated that part of the reason Singapore Airlines is absorbing SilkAir is to better align the brands for travellers from long-haul destinations like Europe and North America using Singapore as a connecting hub.
Mr Sobie stated that several Indonesian routes could be transferred from SilkAir to Scoot, as well as others like Chang Mai in Thailand and Da Nang in Vietnam.
Mr Sobie noted that SilkAir has 32 737s on order and that it would have been more attractive for Scoot to add A320s for growth to keep its short-haul fleet all one type, however, that would not have solved the problem of the looming 737 deliveries.
He said, "Ultimately it is clear that Scoot needs additional capacity to take over more SilkAir routes and the transfer of the 737s was the best solution for the Singapore Airlines Group. The route transfers should improve the group's profitability and long-term position, outweighing the additional costs associated with Scoot operating two narrowbody families."
The chief then added that he expected the first jets would be transferred in late 2018 or early 2019, giving the airline time to remove business class seats from SilkAir jets and to hire pilots.