Scoot chief executive Campbell Wilson says the Australian market is currently a tough place to operate given previous capacity changes, currency fluctuations and the slowdown in the economy.
The Singapore Airlines-owned Scoot flies to Sydney – its inaugural route – as well as the Gold Coast and Perth.
Wilson said the Qantas’s decision to shift its transit point for flights to Europe from Singapore to Dubai meant there was 40 per cent more capacity for Singapore terminating traffic out of Australia. That resulted in severe pressure on pricing, Wilson told delegates at the CAPA Australia Pacific aviation summit in Sydney on Thursday.
“Added to that was the slackening of the Australian economy, the depreciating currency and the effect that had on outbound demand,” he said.
“So certainly Australia has been a bit of a tough place to operate in the last year or so.
“I think we’ve seen that manifested in the decisions by all sorts of airlines to change gauge, to change frequency and in some cases pull out of certain city pairs.”
Scoot and Thai-based low-cost carrier Nok Air have formed a new budget airline NokScoot, which will begin flying medium-haul routes from Thailand.
Given the difficulties currently in Australia and the popularity of Thailand among Chinese, Japanese and Koreans, Wilson and Nok chief executive Patee Sarasin have foreshadowed North Asia for the new airline’s initial routes.
“We are focusing first on north Asia because that is where the demand is,” Sarasin told delegates at the conference.
Wilson noted that because Bangkok – NokScoot’s base – was about three hours north of Scoot’s Singapore hub, it was logical to use the Thai capital for north Asian services.
NokScoot was due to begin flying some time before the end of 2014.