Listen in as CEO Leslie Thng sits down with Aviation Week's Karen Walker to explain how Scoot has become one of the world’s most successful budget airlines and why it is introducing the Embraer E190-E2 to its fleet.
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Rush Transcript
Karen Walker:
Hello, everyone, and thank you for joining us for Window Seat, an Aviation Week Transport podcast. I'm ATW and Aviation Week Network Transport Editor-in-Chief, Karen Walker. Welcome on board. Now, I am absolutely delighted to be joined today by a very distinguished guest from Singapore, Leslie Thng, the CEO at Scoot Airlines.
Leslie, it's absolutely great to be talking with you. Thank you so much for joining me today.
Leslie Thng:
Hi, Karen. Thank you for having me. Nice to see you again.
Karen Walker:
Absolutely. You, too. I must first note that congratulations are in order. I'm thrilled to be able to do this in-person here today. Scoot is the recipient of the 2024 ATW Value Airline of the Year. That's the award we give to essentially the best low cost carrier in the world. It's a very well-earned recognition for a highly successful airline that's now in its 12th year of operation.
Leslie, I had the opportunity to meet you a couple of years ago at Scoot's headquarters office, which is right inside Changi Airport. It struck me then how the staff was so young, energized, motivated. Obviously very proud of what they were doing. I have a strong feeling that's very much part of the success of this airline. Scoot is part of the SIA Group that also operates Singapore Airlines, and the group has posted another set of excellent financial and operational records. Scoot is the low cost carrier part of the group, with just over 50 aircraft flying to some 70 destinations in Southeast Asia, China, India, Australia, the Middle East, and as far as Greece and Germany.
Leslie, it's hard to do long haul low cost ride. Lots of people try, very few are successful, and certainly nowhere near as successful as you are. Can you just sum up some of the key pillars that you feel are part of that success, please?
Leslie Thng:
Thanks for giving us the award. I think the team in Scoot is really appreciative of the award and we actually feel very proud in terms of receiving the award. It is like what you say, people are at the core of our business. I think it is where the collective efforts, as well as the hard work by everyone in Scoot, enable us to really recover very quickly post pandemic.
Related to your question in terms of what are the factors that maybe make Scoot successful in the last couple of years, I think first of all, as I say, people are really where we continue to invest. We invest in training, we invest in building up domain knowledge of colleagues. The culture here and the working environment here that you have seen is really very informal, very casual. Also, facilitating a lot of collaborations among the different teams. It's good to continue to look for ideas, to continue to push the boundaries. To continue to see how we, besides connecting people, moving people from Point A to Point B, is really to look at how we can enhance their experience when they travel with Scoot.
The business model; yes we do have short-haul, medium-haul, long-haul. As short as to Malaysia, as long as to Germany, like what you said, to Berlin. I think it's really about building up the hub in Singapore, where we do not only carry passengers from Point A to Point B, for example from Singapore to Berlin, it's actually we are carrying passengers, for example from Australia. Quite a lot of Australians will travel to Greece or to Germany via Singapore, so they will travel on Scoot from Sydney, Melbourne, or Perth, coming to Singapore, then after that, connecting to our long-haul flights to Europe. I think that is where the strength of Scoot and being part of the whole SIA family, I think that is where we are able to leverage on the extensive network that the whole SIA group can offer to our customers worldwide.
It's not just the Singapore market that is supporting the long haul, it's actually a lot of markets outside of Singapore, flown by Scoot as well as flown by SIA, that are supporting the long-haul routes that we are doing, as well as the medium haul and the short haul. Where the short haul would be a network that enabled our SIA colleagues to sell, for example, from Europe or from US where you are now, to come not only just to Singapore but mainly to other parts of the countries within Southeast Asia.
Karen Walker:
Yeah. Of course, you've got that fabulous base, Changi Airport, just one of the world's most famous and wonderful airports as well. Yeah, it all really does come together. It's an incredible operation.
Can I just ask you a little bit about something that's really in the news right now. You've just come back very recently from Brazil. You were there to take delivery of the first of nine Embraer 190-E2 regional jets. That's an unusual plane for your part of the world. I think Scoot will be the first to take that particular aircraft. You've also got Airbus, A320-family aircraft, and Boeing 787s. Why are you bringing the Embraer regional jet into your fleet?
Leslie Thng:
Okay. I think it's really, when we look at the opportunities for Scoot to continue to tap into the growing travel demand within the region and outside the region, it is where we have evaluated very extensively, based on the current fleet that we have, the Airbus 320, 321, and the Boeing 787. We actually require what we call a regional jet, where it will be a complimentary fleet essentially, enabling Scoot to fly to many more new destinations within the region.
As I mentioned just now, it's really about the whole network that we're looking at. How can we continue to add connectivity to not just Scoot but the whole SIA Group? The Embraer E2 will enable us to, for example, venture into more new points within Southeast Asia. So far, we have announced that the E2 will be deployed on six destinations within Southeast Asia. Three in Malaysia and three in Thailand. Within Malaysia, we will then start one new point, Sibu in Sarawak. This will be our ninth point in Malaysia. Altogether, we'll be flying slightly more than 100 routes into Malaysia over the nine points. For Thailand, we will then go back to Koh Samui, where Singapore Air used to fly.
We'll be leasing nine aircraft. The first aircraft has arrived in Singapore. It's going through the final phase of documentation approval so that we can get the necessary approval from the regulators to put into our AOC. The second aircraft will arrive by the end of this month. The other three will be delivered to us in the second half of 2024. We have three more aircraft coming that will join us in 2024. We do plan to open up a few more points in the second half of this year.
Karen Walker:
Right, okay. That's quite an additional capability that you're bringing in. When it comes to your network growth and focus areas, is it mostly focused on that Southeast Asia area and the tourist leisure market?
Leslie Thng:
At the moment, it is. It is the plan to open up more points within Southeast Asia. Southeast Asia is an enormous market, with almost 700 million people living in Southeast Asia. We think that there are a lot of opportunities to continue to boost travel within the region.
Karen Walker:
Obviously, you're part of SIA Group. Again, Singapore Airlines, another great brand world known, so you've got that as well. Do you have other key airline partners as well?
Leslie Thng:
Definitely we work very closely with SIA. We cross-sell each other's network. I think the efforts to cross-sell each other have actually intensified after COVID, where we realized that there would be more that the group will be able to achieve by cross-selling each other.
We also, at this moment, do have some working relationships with some of the, for example, European airlines. For example, Lufthansa is also tapping our network to sell within Southeast Asia. With some of the local carriers, we continue to look at opportunities where we could come to some commercial cooperation for a win-win solution.
Karen Walker:
Let's just go back a bit to what you just alluded to at the beginning here, when we were talking about what I said. I saw a very young, motivated staff. Very proud to be associated with this brand. You talked about that collaboration, and ideas, and innovation that goes on, and it seems to me like that's an almost constant thing at Scoot.
You leverage quite a lot of technology. That, it seems to me, you're using both to enable that innovation among yourselves, but also to better engage with customers and enable the customer service they want. Can you talk to some of the technology capabilities that you use?
Leslie Thng:
Sure. Maybe I can start from the customer engagement side, as well as how do we then, going forward, use technology to enable more self-service.
I think what we realized post pandemic is that our customers and our passengers are more used to doing a lot of things themselves. They want information at their fingertips as soon as possible. I think that is where the company has invested quite a lot in terms of enabling and developing systems and technology to bring information to the passengers. We now have Chatbot continuously being improved using AI technology as well, to enable our customers to really find out information about their travel on Scoot, if and when they would like to. We also try to facilitate if, for example, passengers for whatever reason could not travel, we now have an automated system where they can do the refund online themselves as well. Like many other airlines, we also have enabled kiosk check in, the web check in, as well as backdrops. I think it's really to facilitate the customers to control part of their journey themselves.
We also look at using systems to really get feedback from our customers. At different touchpoints, we would try to get the feedback from our customers to see what are the areas that Scoot can work on to improve ourselves, as well what are the areas that the customers like about Scoot so that we can continue to reinforce that.
Within the organization, we also use systems to improve our capabilities. For example, we have now moved on to a new revenue management system where it will give us the ability to price as well as to sell on an O&D basis instead of segment basis. I think this is something that is new for us, something that we have evaluated and find that it would be useful for us going forward because of the network and the connectivity that we are building. We also invested in systems to improve our productivity and operational capabilities, things related to flight planning. We now use the Lido System. We also moved on to a new rostering system to try productivity as well as automation. As a whole, we continue within the company to improve customer engagement, to improve productivity.
There is also leverage that we can use from the parent, where the parent continues to invest a lot in AI. They continue to have [inaudible 00:12:40] that encourage innovations. We also try to leverage the resources that are available from SIA.
Karen Walker:
It's a very smart approach, it seems to me, and one which doesn't just sit still. You're constantly evolving and learning about new technologies that you can apply, but also constantly learning about your customer.
There's a lot of low-cost carriers in Asia. There's a lot around the world, but certainly in Asia and Southeast Asia in particular. It's a very big thing. How does Scoot set itself apart in that market?
Leslie Thng:
We try to differentiate through the cabin experience that we bring to our customers. For example, with the E2 joining our fleet now, we have three different fleets that the customers can experience: flying in a regional jet, a narrowbody or a widebody. We also cultivate what we call Scootitude within Scoot, where our cabin crew will engage in different activities onboard to engage the customers. For a specific festive celebration, for example Valentine's Day, there will be some activities onboard to celebrate Valentine's Day. The Christmas Day, we have some activities to celebrate Christmas. For example, Taylor Swift was in Singapore for her concert, so we did have some activities onboard to sing Taylor Swift songs for the Swifties who were coming to Singapore by flying Scoot to attend the concert. These are things that we try to do that may not be so traditional. I think these are things that we encourage our crew to look at: innovative ideas to engage our customers when they fly on us.
Definitely in terms of product, we would always look at what the competitors are offering and see whether they are products that would also make sense for us. Where we could take onboard a big deal and even try to go one notch higher than what they are offering. I think it is really back to the whole DNA and the mindset of our colleagues in Scoot, where we continue to push boundaries, we continue to challenge the status quo to see whether there are things that we can do differently. That would be one factor that differentiates ourselves from the other low-cost carriers.
The other factor is really back to the network connectivity that we are trying to build. We look at how we can bring passengers from one country to another country via Singapore, by looking at connectivity, by working with the Changi Airport Group as well as our ground handling agent in Singapore, to facilitate the transit experience within Changi to be a good experience when you need to maybe wait an hour or two before catching on your next flight to your final destinations. I think the transit experience in Changi, I think is something that is also important for us. I think that also set maybe us apart from other competitors, with a competitive hub like Changi in Singapore.
Karen Walker:
Yeah. Changi is really second-to-none for that experience. I know I was there as recently as in November. I've been there so many times, but it always amazes me that, every time you go back to Changi, they've done something different and new, and it's just a really wonderful airport to be at.
I always like to ask when I'm speaking to an airline leader, I always have to ask about sustainability. We both know how important that is to the industry right now. Again, particularly as an airline leader in your part of the world, running a low-cost carrier, what do you see as the key steps that need to be taken for sustainability?
Leslie Thng:
I think the whole SIA Group is serious and committed on our sustainability goals. I think we have announced the net-zero target by 2050. Further, we have also given our commitment towards using 5% SAF by the end of 2030.
I think first of all, what we believe is really that the most effective way of reducing carbon emissions is through using the latest technology or latest generation of aircraft, which the whole SIA Group is committed to. For example, the Embraer aircraft that we are bringing, the E-jet, it's the latest, the E2, which is supposed to be one of the most fuel-efficient aircraft within their range. I think similarly for us, when we look at the A320 families, we have just planned to retire our A320ceos and be replaced by the A320neo, which are more fuel efficient, thus emitting less carbon dioxide into the air. I think this is the overall plan that we look at.
We also review the operational things that we do to make sure that operationally, we can be as efficient as possible. We built an ecosystem to make sure that, for example, we use single-engine taxi to reduce carbon emissions while taxiing before taking off. I think these are things that we stay committed to.
What I think is required from the industry is, because we all believe that SAF is one of the enablers for us to reduce carbon emissions, but the production of SAF is now unfortunately at a low end, meaning a low quantity, because the supply is ICAO, to work up solutions where we, as an industry, can enable the supply of SAF at a more affordable price. SAF at this moment is about four to five times more than jet fuel. At that price, it would not be sustainable for airlines to adopt a high percentage of SAF. If we can create a supply, the demand maybe, the supply will follow. I think that is where we will be working closely with the other stakeholders within industry to drive this.
Karen Walker:
It's a multi-layered approach. There's the things that you can do, as you say, you have a very young fleet, very efficient fleet. Then, all the things that you can do as an operation. But then, there's that much wider collaborative event across not just the aviation industry, but across other industries and other organizations. Yeah.
Can you just finally, Leslie, give me a little bit of a sense of your key priorities for the rest of this year, as you start to look at '25, what are the key things that you're focused on?
Leslie Thng:
One is we continue to look at the network connectivity, especially with the E2 joining us. We want to make sure that the network that we're building using the E2 will be a network that is effective in allowing Scoot to continue to tap on the growing demand.
The second part, because of extensive efforts by the team in the past 12 months, we actually have recovered in terms of capacity that is now more than 2019, which means we are fully recovered. Because of the record financial performance that we have achieved, I think it's key for us to maintain many of the gains that we have secured in the past 12 months. I think it's important for us at Scoot to look at how we can maintain that competitive advantage going forward.
On the other part, it's really about how do we continue to enhance our customer experience? I think we spoke briefly about using technology. I also alluded to things like we are reviewing our current product and services to see whether we can bring something new to the market in the coming year or in the coming months. Hopefully, we will have something to announce in the coming months.
The other aspect is really back to the people at Scoot. We have recruited many new colleagues who have joined us in the past 12 months. I think it's important for us to reinforce the culture that we are building. We continue to enable them and empower them to do what they have to do to do the job. We look at how we can provide training tools, as well as the knowledge domain, for them to continue to do what they do best at work.
I think those are the key priorities for us in the next 12 months.
Karen Walker:
Really building on those strong foundations that you've built up in a relatively short time. Still a pretty new airline, you've achieved a lot, but it's really about building on those strengths, correct?
Leslie Thng:
Yeah, that's right.
Karen Walker:
Yeah. Leslie, thank you so much for your time today. It's always great to chat with you. I am really looking forward. It's going to be an actual double Singapore celebration when we meet up in Dubai, because obviously Scoot, as I said, is the Value Airline of the Year, and then Goh Choon Phong, the CEO at Singapore Airlines, he is receiving the Excellence in Leadership Award, which is another very, very well deserved award. I am greatly looking forward to seeing you both in Dubai on May 31, for the award ceremonies.
I'd also like to thank our producer, Guy Ferneyhough. And of course, a huge thank you to our listeners for following Window Seat. My colleague David Casey will be hosting the next couple of podcasts from our Roots Europe event in Denmark so please tune in. Remember to follow us on Apple Podcasts or wherever you like to listen. Until next time, this is Karen Walker, disembarking from Window Seat.
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