While Scoot has had its share of marketing successes, it looks like that is not enough to pull up the airline’s profits.
It was reported in the Straits Times that the long-haul budget carrier has opened its books for the first time to reveal US$25 million in less than two years.
While a Scoot spokesperson declined to confirm the figures quoted, a recent analysis report by the Centre of Aviation projected the low cost carrier (LCC) to not be profitable for at least another year.
While the LCC market has been known to be facing challenges, it came as a surprise to some after the brand has been often lauded for its quick thinking in its marketing and its social media savvy. For instance, working with popular local sites such as SGAG for its promotions and deftly maneuvering customer dissatisfaction online, despite a few snags. While some of its posts border on irreverent (such as this one where it got slammed by AWARE for being sexist, and another where it took a jab at shamed expat Anton Casey with its promotion), most marketing experts agree its approach is fresh, particularly in view of how the brand broke away from parent airline Singapore Airlines classic, but far more conservative approach to marketing.
“Given its resources, Scoot is probably done its best for social media,” said Ryan Lim, founder of digital consultancy QED. However, many other factors are at play, such as the cost of manpower, fuel, and overall economy. “It also takes new companies time to become profitable (refer to Amazon). So till the full picture is available, Scoot may well be on its path towards profitability already thanks to all its efforts, including marketing,” said Lim.
Also, while Scoot is often cited in case studies, some were not on pulling in revenues but rather, worked to help the brand in crisis recovery, notes Lim.
“While the awareness levels went up significantly for Scoot, it does not necessarily translate into sales under such circumstances. In fact, it probably had a reverse effect,” said Lim. “While Scoot has fared reasonably well, it cannot distort reality that competition is indeed very intense,” he added.
According to the Center of Aviation report, Singapore has seen traffic growth slow significantly over the last year, as the industry is hit by challenges in a once booming short-haul market. Total passenger traffic at Singapore Changi grew by only 5% in 2013, ending a three-year run of double digit growth, and is on pace to grow by less than 2% in 2014, said the report.
Across the market, profitability in Singapore has tumbled for its three LCCs, Tigerair Singapore, Jetstar Asia and Scoot.
“There’s only so much a marketing approach can do,” said Graham Hitchmough, managing director of the Brand Union Singapore. “It needs to focus on operations and product before layering on a marketing approach,” he said.
However, it looks like the brand is taking steps to work this out, with a recent tie up with Tiger Airways and a new order of planes coming in. “I think we will see this (tie ups across LCCs) taking place as these airlines look for greater economies of scale,” he added.