New Budget Air Carrier to Bring Out More Dollars From Australia

Australians will have another alternative budget carrier from Asia by mid-2012 as Scoot operates a 402-seat daily flight between Sydney and Singapore. Scoot will offer 40 per cent lower fare than traditional airlines and targets young and adventurous travelers who want to go around the region at lower cost.

However, an analysis by The Sydney Morning Herald warns that Scoot has the potential of bringing out more dollars than bringing in foreign currency.

Based on an average of 400 to 410 seats per flight, Scoot has the potential of flying in 146,000 passengers yearly from Singapore to Sydney. New South Wales Premier Barry O'Farrell said the entry of Scoot would bring an additional $150 million a year to the state's economy in terms of arriving tourists.

On an assumption that the plane would be 80 per cent full and 47 per cent of them are foreign tourists who would spend an average of $3,300 each, total tourism spending would reach $180 million, reckoned Sydney Morning Herald's Tony Webber, who was general manager of microeconomics and chief economist of Qantas Group from 2004 to 2011.

Mr Webber pointed out not all the money will stay in NSW, some would go to Queensland or Victoria as the tourists travel to other Australian states, while some of the money would revert to foreign companies through airfares and travel agency commissions.

However, Mr Webber said Sydney to Singapore flights of Scoot would also involve bringing out of Australia about 62,000 residents who would spend also an average of $3,300 each overseas, which would mean a loss of $200 million for NSW or a net deficit of $50 million for the state economy.

Besides NSW, Mr Webber said that the bigger loser would be domestic tourism destinations such as the Northern Rivers, the Mid North Coast and the Blue Mountains as cheaper flights provide a financial incentive for Aussies to go overseas and spend their vacations and precious dollars abroad rather than home.

Scoot Chief Executive Campbell Wilson debunked industry suggestions that Australia's aviation market could not sustain another budget carrier.

"We have seen in all of the markets that no frills carriers have entered whether it be short haul or long haul, that they've grown the market.... Sydney has a huge untapped potential for inbound and outbound no frills travelers and we will deliver that," Mr Wilson told the Herald Sun.