Singapore Airlines’ low-cost subsidiaries Scoot and Tigerair will merge on July 25, operating as a single entity under the Scoot namesake. Under the new framework, Scoot will take over Tigerair’s 23 Airbus A320. The airline has begun repainting the airplanes in Scoot’s livery and expects to complete the process by the middle of next year. However, Scoot will adopt Tigerair’s ‘TR’ IATA designator code.

Work on the merger, including preparations for integrated ground staff, reservation systems, flight scheduling and approvals from various regulators, started in May 2016.

“By operating under a single airline operator certificate, we will be able to utilize our aircraft more effectively and cost savings from streamlining our operations will be passed onto our customers, allowing us to market our fares more efficiently," said Scoot CEO Lee Lik Hsin.

“We are exploring other destinations with good potential demand and that are complementary to our network and that fit into the SIA Group strategy. I am pleased to say that we will be launching five more new routes in the next year, at least one of which will be a long-haul destination,” he added. Scoot launched Singapore-Athens on June 20 with a Boeing 787-8 and reportedly is considering Hawaii as another potential long-haul destination.

Lee, who also served as Tigerair’s boss, in May 2016 took on the CEO role of Budget Aviation Holdings—a company SIA established to manage the two LCCs. He thinks Scoot’s success as a low-cost brand will prove a key factor in the success of the merger. “Scoot has become quite the transformative force in the aviation industry, elevating the budget travel experience for customers,” he said. “Not only that, we also aim to deliver a service experience with a difference: spontaneity, warmth, exuberance, fun. These efforts to distinguish ourselves have gained us industry and consumer recognition.”

Although Scoot began as a medium- to long-haul carrier, inducting regional routes should not dilute the brand, added Lee. “The superior features of the 787, in particular for LCC operations, have been well publicized, but that is just one of the aspects of the Scoot brand,” he said.  “As mentioned, we also aim to deliver a different service experience, and this cuts across all routes, whether long, medium or short haul.”

Despite intense competition in Southeast Asia, Lee thinks plenty of opportunity exists for growth not only of Scoot, but the market as a whole. LCCs account for almost 60 percent of seat capacity within Southeast Asia while registering just more than 20 percent of all capacity between the region and the rest of the world.

Plans call for Scoot to take six more Boeing 787s by 2020. It also holds firm orders on 39 more A320neos and another batch of 11 ordered by Tigerair.