When Air Canada announced plans for a new low-cost subsidiary last month, many were left scratching their heads. In a climate of high oil prices and an industry trend of cutting capacity, what would motivate such a move–especially with the high failure rate of similar ventures in the past? It appears that AC pilots have at least temporarily stopped the Canadian flag carrier from starting their new project, but on the other side of the world Singapore Airlines announced similar intentions today.
Singapore has ambitious plans to add a more capacity on longhaul routes through a low-cost subsidiary that aims to compete with the burgeoning low-cost market in the region. Using widebody aircraft, the new division will be run independently of SQ.
"As we have observed on short-haul routes within Asia, low-fare airlines help stimulate demand for travel," Goh Choon Phong, chief executive of SIA, said in a statement.
It should be noted that Singapore Airlines already operates a low-cost carrier on shorthaul flights through their Silkair division. While Silkair is cheaper than mainline SQ flights, it usually is more expensive than ultra low-cost carriers like JetStar and AirAsia–so don’t count on $50 fares from Australia to Singapore or even prices that resemble the defunct Oasis Hong Kong Airlines, where you could often buy a walk-up o/w ticket from Hong Kong to Vancouver for under $400 including taxes.
A name of the airline and what routes it will operate have not been determined yet. It will be interesting to watch this development and see if SQ is able to succeed in a market where many have tried and failed.