Scoot CEO Campbell Wilson tells ATW correspondent Chen Chuanren about his return to the LCC and how the Singapore-based airline can see the light at the end of the tunnel after a tough year.
This interview is part of Air Transport Month, a detailed examination of the future of the air transport industry as we begin to climb out of the COVID-19 crisis.
Rush transcript:
Chen Chuanren:
Welcome back to Air Transport Month. Today, we'll be speaking to Singapore-based low-cost carrier, Scoot, and their CEO Campbell Wilson.
Well, Campbell, thank you for having us at your office today.
Campbell Wilson:
A pleasure, Chuanren.
Chen Chuanren:
Yeah. It's still so unfamiliar to be in a face-to-face interview after such a long time, isn't it?
Campbell Wilson:
Yeah. Well, it's testament to how well Singapore has handled this that we can actually do it face-to-face, albeit one meter apart.
Chen Chuanren:
Yeah, indeed. Well, you are a founding CEO for Scoot back in 2011, and you went back to Singapore Airlines in 2016. How's it like returning as a CEO again?
Campbell Wilson:
Well, I wanted to come back and, in fact, I knew I was coming back before 2020 commenced. Of course, I didn't expect to come back to quite this environment. COVID, obviously, commenced in January. I took over 1st of April and then on 4th of April, Singapore declared its circuit breaker where everyone went home. So after four days in the office, everyone disappeared, I had to take it not personally.
Chen Chuanren:
Are there any particular missions that you have now?
Campbell Wilson:
Yeah. Obviously, coming back pre-COVID, the intention was to take Scoot to the next level. We had a significant order book, or have a significant order book for wide bodies, narrow bodies, including a new fleet of A321s, and so there was going to be a significant growth phase.
Obviously, coming during COVID changed that dynamic completely. It's initially about crisis management, then it was about restructuring our fleet head count, other costs, ensuring we have enough liquidity. And having gone through that for now seven months it is about really ramping up our preparations for whatever world exists after COVID.
Chen Chuanren:
And somehow it's good. I mean, being a subsidy of Singapore Airlines, does it give you a stronger standing after COVID as part and what's the synergy like between the airlines?
Campbell Wilson:
Well, I think that the current environment is still very, very difficult. Most borders are closed regionally. Scoot is very much a regional carrier with a big presence in Australia, China, India, Indonesia, and all of those countries are either totally or semi-closed to non-citizens. So our capacity is down 95% from pre-COVID, our passenger numbers are down 99% pre-COVID. So it's obviously a challenging environment for all.
However, as part of the SIA Group, we have access to liquidity. SIA Group has done a very substantial capital raising and, thankfully, with the support from the shareholders and so our survival through this is assured. It's just we need to reshape ourselves to be ready for the patterns of travel, the requirements of travel and the regulatory requirements of travel when we're finished.
So a lot of effort going into, aside from fleet and liquidity and head count, to what is the new customer experience. So there's a lot of digital initiatives that are rolled out, especially to make things touchless both on the ground and in the air. Obviously, of course, the hygiene practices of the aircraft, and, of course, many of the self-service capabilities that were already part of Scoot's proposition, but now are even more heightened and I think are probably more received, now more accepted by customers because they themselves have become more digital through this COVID period.
Chen Chuanren:
Now you mentioned about managing a fleet and, of course, you have inherited quite a fair bit of A320 family from the former Tigerair. How are you managing the fleet and the network right now?
Campbell Wilson:
We have, obviously, a large A320 fleet. That is progressively transitioning from CEOs to Neos. Then with the addition of the A321s, obviously, it changes the composition and, therefore, the opportunities that are available to us. But for the most part during COVID, we've been operating the 787s and within the 787s, the 787-9s, largely because the network we've been operating has been supported principally by cargo, and they have the largest cargo capacity.
China is a little bit of an exception because there is still quite strong traffic between Singapore and China, and it's constrained into a very limited network based on the regulation of only a few cities and only one time per week. So that's a passenger as well as cargo story, but most of the rest of the network is a cargo story.
The A320s, unfortunately, don't have that same capacity so, therefore, the opportunity is a bit more limited. But we've actually converted a couple of A320s, taking out all the seats so that they can operate a full cargo operation, and those have been quite successful.
Chen Chuanren:
And you are taking deliveries right now?
Campbell Wilson:
We are. In fact, we just took a delivery of a A320 Neo. We've got some wide bodies coming, as well as the 321s.
Look, these are contractual obligations and in the near term, there's very little we can do to defer or change, even though these aircraft are surplus to requirements at the moment. But, of course, we have been negotiating with the manufacturers, as well as the lessors, to restructure the delivery stream, perhaps to push out some of the aircraft further into the future to try and better balance the capacity without expectations of demand.
Chen Chuanren:
I see. In recent times, we see a second wave outbreak in neighboring countries and a lot agree that short-haul regional market will open up first.
However, looking at what's happening right now and Singapore is busy establishing green lanes with countries further afield, do you think this will still be the case that short-haul regional market will open up first?
Campbell Wilson:
Well, leaving aside specific countries, I think the low-cost regional model actually is where you want to be at this point in time. We are point-to-point. We're not reliant on hub aggregation. We are typically leisure market, so we're not reliant on corporate budgets or duty of care, or the other considerations of a company traveler.
We have naturally a low-touch service proposition, which people don't necessarily want a high-touch proposition in this environment. And, regulatorily, it's not always possible to provide a high-touch, and so why would you pay for a high-touch price when you're not getting the high-touch product? So that naturally advantages a lower ticket price operator like us and then, of course, a lower operating cost. So I think all of those macrodynamics actually work in the low-cost regional carriers' favor.
The one I didn't mention, of course, is distance. People seem to be more concerned the further away they fly from home so that's not who we're playing. So I think our model is advantaged to the new world.
Of course, then it's contingent on borders. India currently remains closed, Australia still remains closed to non-citizens. China is very constrained in the capacity they allow operated. So as those borders closed, I expect our model to recover first.
As for long haul, I think it's never been a focus of Scoot. It's always been a niche addition to what we've operated. And I think those long-haul markets will take further to come back, in part, because they are reliant on how the hub aggregation does require many markets to open so you get that fee.
Chen Chuanren:
Scoot was initially conceived as a medium to long-haul LCC. How do you think long haul, this model, will change or reinvent itself after COVID-19?
Campbell Wilson:
Goodness, you asked for my crystal ball. As I mentioned before, I think that the short to medium haul is the sweet spot for us to play in for the moment. Long-haul LCC was always a niche proposition and, quite honestly, I expect it to continue to be a niche proposition in the post-COVID world. Whether it is advantaged or disadvantaged, I think very much depends on how things develop from a supply situation, which carriers are still alive, which ones are still operating, what sort of networks, as well as the demand situation, people's willingness to travel, especially traveling long haul.
So, quite honestly, I don't know what the future is for the long haul part of a low-cost proposition. But as I said, I'm very, very confident in the short to medium part of the low-cost proposition. I think we'll be at the vanguard of recovery, subject, of course, to governments opening borders.
Chen Chuanren:
And we hope for the best, right?
Campbell Wilson:
Well, I think in Singapore we're fortunate we can see that there has been progress. We can see with the Hong Kong-Singapore bubble being announced. We can see with Singapore is proactive opening it, these borders to New Zealand, most of the Australian states, Vietnam. There is light at the end of the tunnel. We just don't know quite how long that tunnel is.
Chen Chuanren:
With that, thank you, Campbell, for the time and joining us at Air Transport Month. Thank you.
Campbell Wilson:
My pleasure. Thanks, Chuanren.
Chen Chuanren:
Thank you.
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