Much has been made of the rise of the Asian middle classes, with brands across categories hoping the 500 million people across the region who now identify as middle class will translate to a new market for the products they are struggling to sell in other regions.
Of course, these consumers do have deeper purses than ever before and are looking to enjoy the products and experiences their new disposable income affords. However, their spending habits do not always follow expected paths. Today’s middle classes were yesterday’s ‘just getting by’s’ and old habits die hard. Despite their reputation for excess, Asians remain committed savers. There’s comfort in mixing luxury and budget items that can appear confusing - just because her outfit looks cheap doesn’t mean the Chanel purse is fake!
This is especially true in the travel sector with travellers flying budget airlines and spending the ‘savings’ on a luxury hotel, shopping or fine dining. The justification is that any lack of comfort in the flight is of short duration, whereas the luxury experience is far longer lasting and well worth paying for. This isn’t seen as stingy, but savvy behaviour - trading off on things that matter less, to spend more on things that matter more.
And that’s where I believe Singapore Airlines made the right move in setting up its newest subsidiary, Scoot, for long-haul budget travel. While Singapore Airlines is known for world-class service, particularly on long-haul routes, it understood that this can limit its appeal and relevance to those who desire to travel cheaply and often, rather than seldom but in style.
Scoot meets this need by offering affordable, transparent fares to a range of aspirational destinations. They also understand that sometimes customers do want to trade up on small things, but these things aren’t always the same, even for the same passenger. For example, sometimes he’ll be paying extra for speedy boarding, sometimes he won’t; some customers will pay extra for legroom and some won’t. Being flexible, transparent and understanding that customers want to customise their experience is the foundation for Scoot’s success, while establishing Scoot as a separate brand has allowed the parent company to profit from the growing no-frills sector while protecting the parent brand.
At Truth, we’re frequent fliers for both work and pleasure so we’re eagerly watching out for the next steps in how the Asian airline industry develops. In the short-term we expect to see the no-frills sector continue to grow. However, rising costs seem inevitable and are likely to limit affordability and make some routes unviable. In this context, we see Scoot as well-placed given the purchasing power provided by the parent brand and its ability to understand its consumers and their needs.
To find out more about the Asian consumer and what’s important to them, contact Truth Asia at firstname.lastname@example.org