Singapore Airlines has unveiled plans to launch a low-cost, long-haul carrier.
The new carrier is expected to start operations within a year, and will be wholly owned by SIA but managed independently.
It is expected to fly routes over five hours, competing with the likes of Jetstar Airways, the low-cost arm of Qantas, and AirAsiaX, the long-haul unit of Malaysia’s AirAsia.
Goh Choon Phong, SIA’s chief executive, said on Wednesday that the as yet unnamed subsidiary would stimulate demand for long-haul budget travel, mirroring the strong growth of short haul low-cost airlines in Asia.
He said: “We are very excited about what our new low-fare subsidiary will offer to consumers. We are seeing a new market segment being created, and this will provide another growth opportunity for the SIA group.”
The proposed airline will not compete with SIA or its low-cost offshoot Tiger Airways, in which Singapore Airlines holds a 33 per cent equity stake.
“At the same time we remain fully committed to the further growth of SIA, which will continue to offer the highest-quality products and services to our customers,” said Goh in the statement.
SIA says more details of the airline, including its management team, branding and route network will be announced in due course.
The new airline will start operations with a fleet of aircraft transferred from Singapore Airlines, with longer term fleet decisions yet to be finalised.
Tony Fernandes, chief executive of AirAsia and founder of its long-haul subsidary AirAsia X, said on his Twitter account: “[I’m] not worried. They [SIA] should be worried. Their P and L [profit and loss statement is] going to hurt. Business should stick to what they know best.”
AirAsia X, launched in 2007, flies from its Kuala Lumpur hub to London Stansted, as well offering routes to Australia, India and China.
Jetstar, which flies medium-haul routes from Australia and New Zealand to China, Japan and South-East Asia, is also in keen competition with SIA, but is not regarded as a low-cost airline because its operating model allows for code-sharing and passenger and baggage transfers with Qantas.
Singapore Airlines is also facing increasing competition for premium long-haul passengers from Middle Eastern airlines such as Emirates and Etihad Airways, voted “World’s Leading Airline” by World Travel Awards.