Singapore Airlines releases Tiger into Virgin’s lair

Courtesy APP

I HAD in the past commented that the day may come when Singapore Airlines will let go of Tiger Airways in which it has a majority stake of 33 per cent. (See Tiger Airways-Scoot tie-up: Time to redefine sibling airline roles, Oct 13, 2012 and Tiger Airways’ future hangs In the balance, Aug 12, 2011).

Virgin Australia this week announced it has acquired a 60-per cent interest in the Australian subsidiary of the low cost carrier – Tiger Airways Australia – at a cost of A$35 million (US$36 million). Virgin chief executive John Berghetti said: “By partnering with Tiger Airways, we can use our expertise to leverage Tiger Australia/s competitive cost base and build a sustainable budget carrier.” It is reported that Virgin would together with SIA invest a further A$62.5 million to grow Tiger.

The deal could not have come a better time. For SIA, it has bided its time for Tiger to heal, now that the Australian authorities have lifted the restrictions on its operations over safety concerns. The launch of wholly-owned budget subsidiary Scoot points to that eventuality, especially now so when both budget airlines may increasingly be operating the same routes and competing in the same market.

Virgin is hungry for alliances to strengthen its operations at home and abroad as it seeks to expand its network. Both airlines are facing stiff competition from Qantas which has entered into a partnership with Emirates Airlines, and it seems almost a natural development that SIA and Virgin should now join hands. Besides, Virgin and SIA have already entered into a strategic arrangement to facilitate seamless transfers between the flights of both airlines and share the use of each other’s airport lounges – an initiative that will allow SIA wider access to the Australian market. This agreement has taken on a more binding format when SIA too announced this week its purchase of a 10-per cent stake in Virgin.

It looks like Tiger Airways Australia has secured a new future with Virgin, which said Tiger will continue to operate under its own identity. One never knows. We remember Ansett Australia, don’t we?

And what about parent Tiger Airways based in Singapore? Now that SIA has taken the first step to loosen its grip with the sale of the majority Australian stake, time will tell if a suitor is not already waiting at the door.

 

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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