Scoot: Singapore Airlines’ Low-Cost Carrier Strategy

Scoot: Singapore Airlines’ Low-Cost Carrier Strategy

By
Glenn Carroll, Jesper Sørensen, Debra Schifrin
2020|Case No.SM321| Length 30 pgs.

In December 2019, Scoot, the low-cost carrier (LCC) launched by Singapore Airlines Limited in 2011, had successfully established itself in the Asian market, having flown over 65 million passengers to 68 destinations with a fleet of 48 aircraft. Scoot accounted for 14 percent of seat capacity in Singapore, and 43 percent of LCC capacity out of the country. In 2016, SIA fully acquired and integrated the local LCC Tigerair into Scoot. Scoot’s growth, along with the integration of Tigerair, enabled SIA to compete for price-sensitive leisure travelers on short- and medium-haul routes, particularly within Asia, and premium passengers on medium- and long-haul routes. Scoot had been essential to building network connectivity within Asia and allowing SIA to compete effectively with competitors entering the market.

Reflecting on Scoot’s evolution from 2011 to 2019, Goh Choon Phong, CEO of Singapore Airlines Limited felt that the SIA Group had succeeded in fulfilling its strategic intent of being invested and a market leader in both the full-service and low-cost markets. He contemplated the opportunities and challenges ahead for SIA. Because Scoot operated many places where the full-service airline did not fly, Goh thought that SIA could gain tremendously by making connections between flights by Singapore Airlines, Scoot, and SilkAir—the airline’s short-to-medium haul premium subsidiary—as seamless as possible. But there were challenges as well, since Scoot provided different service levels and had been established and run with a high level of autonomy. Goh explained, “There are different expectations between the full service and the LCC if there are any delays. But when you are connecting the two of them, how do you manage the expectations? These are all things that we are still learning. But we are determined, and we think it can be resolved. We are just right at the front of the learning curve.”

Learning Objective

The case is designed to help students understand the process of corporate diversification. It allows for a discussion of the conditions under which multi-business firms create and capture more value than stand-alone firms, as well as a consideration of the organizational implications and challenges involved in running a multi-business firm. In addition, the issue can be used to discuss organizational design and alignment, and the process of corporate intrapreneurship, or launching new ventures within an existing firm.

This material is available for download by current Stanford GSB students, faculty, and staff, as well as Stanford GSB alumni. For inquiries, contact the Case Writing Office.