The Tiger retreats

CEBU Pacific Air has applied to the Philippines authorities to acquire Tigerair Philippines. While both airlines have said there is no definitive agreement yet, parent Tigerair which owns 40 per cent of Tigerair Philippines all but confirmed the company is in the midst of negotiating a transaction involving its Philippines joint venture. The Philippines authorities are said to be also looking at the impact of a possible merger between the two budget carriers based in the Philippines.

Is the news more about Cebu Pacific or Tigerair?

For Cebu Pacific, it signals expansionary plans to improve its competitive edge in a growing arena of budget carriers in the Philippines that include AirAsia and PAL Express. Acquiring Tigerair Philippines would give it more slots at Manila`s crowded Ninoy Aquino International Airport. It also increases Cebu Pacific`s access to destinations beyond the Philippines such as Singapore, Bangkok and Hong Kong operated by Tigerair from Clark International Airport.

Cebu Air informed The Wall Street Journal that the company “is always looking into various opportunities to grow and improve its air transportation business, including possible strategic alliances and acquisitions.”

Courtesy Bloomberg

Courtesy Bloomberg

But for Tigerair, the news may be telling a different story considering how it has belatedly tried to augment its presence in the region through acquisitions in SEAir (the joint venture which became Tigerair Philippines) and Mandala Airlines (renamed Tigerair Mandala) of Indonesia. While mergers and acquisitions are common occurrences in the industry, Tigerair’s move may come across as surprising in view of the impending full implementation of Asean Open Skies next year.

It looks like a retreat for Tigerair that, in spite of a makeover last year, continues to face tough competition beyond Singapore. Yet it may be a blessing as it reassesses its position vis-a-vis not only external rivals such as Jetstar and AirAsia but also internal competition with sister airline Scoot. Some analysts have speculated a possible merger between the two budget carriers in the Singapore Airlines stable after recent announcements that they would work together to eliminate duplication and share resources. The writing was already on the wall when Scoot commenced operations in 2012 and when Virgin Australia acquired 60 per cent of Tigerair Australia last year.

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About Dingzi
Writer by passion, with professional expertise in aviation, customer service and creative writing. Aviation veteran, author, editor and management consultant. Besides commentary on business issues and life-interest topics, travel stories and book reviews, genres include fiction, poetry and plays. Nature lover who abhors cruelty of any form to animals, and a tireless traveler. Above all, a dreamer.

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