SIA announce LCC "Tiger Airways"
Reuters
Singapore Air to unleash 'Tiger' into budget market
SINGAPORE, Dec 9 (Reuters) - Singapore Airlines Ltd , Asia's largest airline by market value, said on Tuesday it would launch a budget carrier called Tiger Airways in the face of growing regional competition.
The success of Asian budget carriers such as Australia's Virgin Blue and Malaysia's Air Asia has exposed strong pent-up consumer demand for cheap fares at a time when Asia's aviation industry is recovering from the fallout of SARS.
"SIA recognises the potential for low cost travel in this part of the world and wishes to participate in this new segment of the market," said Chew Choon Seng, chief executive of Singapore Airlines, in a statement.
Regional rival Qantas Airways Ltd recently said it would launch a low-cost airline next May to fend off competition from other budget operators.
"They were talking about this for a while and this was pretty much expected. It's a defensive move," said Philip Wickham, regional analyst at ING Barings.
Singapore Airlines said the new airline, due to take off in the second half of 2004, would be launched in partnership with Singapore's state investment agency Temasek Holdings, along with Indigo Partners LLC and Irelandia Investments Ltd.
Singapore Airlines will hold 49 percent, the Singapore government's powerful investment agency Temasek will hold 11 percent, Indigo Parters 24 percent and Irelandia, the investment vehicle of Tony Ryan, founder of Irish no-frills airline Ryanair , will have 16 percent.
"Singapore Airlines and Temasek will own a majority of the new airline, but Tiger will be separately certificated and operated independently by a team specially recruited for the low cost airline," the carrier said in a statement.
The low cost airline will operate a large fleet of single type, narrow body aircraft.
"No firm decision has yet been made on aircraft type. However the excess supply of aircraft available worldwide is expected to result in very low prices from the manufacturers and lessors," the airline said.
The classic formula for a budget airline is to get high productivity from planes and employees on short- and medium-haul flights using a standardised fleet of aircraft that are turned round rapidly at uncongested secondary airports.
Booking is done on-line, seating is all-economy and service minimal and usually there's no free food and drink.
But some analysts say that formula cannot work as well in Asia, pointing to a dearth of suitable secondary airports and to long flight times that marginalise the advantages of quick turnarounds and make service more attractive.
Charlie Clifton, former director of operations at Ryanair, will establish the base in Singapore and set up operations throughout Southeast Asia over coming months, the statement said.
"It's probably a good idea for them to bring them in," said Wickham, referring to Ryanair's partnership. "They have been running a low cost airline so it makes it a better build."
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AFP
Tuesday December 9, 11:51 PM AEDT
SIA roars into no-frills market with Tiger Airways to take off next year
Singapore Airlines (SIA) roared into Asia's budget aviation market, announcing it will begin operating a no-frills carrier called Tiger Airlines with three partners next year.
Tony Ryan, the founder of successful European low-cost carrier Ryanair, is part of the venture along with the Singapore government's investment arm, Temasek Holdings, and US private investors Indigo Partners.
"Singaporeans and travellers in the region will get to fly to destinations in Southeast Asia at really low fares from Tiger Airways when it begins operations from Changi airport in the second half of 2004," a joint statement published on the Monetary Authority of Singapore's website said Tuesday.
SIA chief executive Chew Choon Seng said Tiger Airways will operate a fleet of single-aisle aircraft that will fly up to four hours from Singapore.
SIA will hold a 49 percent stake, Chew said, with the company not willing to take majority ownership.
"We have observed that almost all attempts by full service network airlines to operate wholly owned low-fare carriers have been unsuccessful," Chew said.
"This is because the low-cost model requires completely different methods and procedures, marketing approaches and skills.
"It is hard to be both premium, full-service and low-cost, no frills at the same time."
Chew said SIA's inability to run a low-cost carrier was the reason for seeking a partnership with Ryan through his family's investment vehicle, Irelandia investments, and Indigo.
However SIA will own a majority of the airline with Temasek, which will have an 11 percent stake in Tiger Airways. Temasek is already SIA's majority shareholder.
In a further indication the Singapore government has no intention of losing control of Tiger Airways, Chew said a Singaporean will be appointed as chief executive of the fledgling company.
Ryan's Irelandia Investments, which no longer has interests in Ryanair, will hold a 16 percent stake while Indigo, a private equity investment firm headed by US businessmen David Bonderman and Bill Franke, have the remaining 24 percent.
Ryan, who transformed the European airline sector by establishing Irish-based Ryanair in 1985, said Tiger Airways would boost the tourism industry in Southeast Asia.
"I am confident that the new airline will deliver the benefits that low-cost carriers can bring in terms of tourism and job creation, not only in Singapore but also to the other countries it serves," Ryan said in the joint statement.
Former Ryanair director of operations Charlie Clifton, who has been appointed to establish a base in Singapore as well as outstations across Southeast Asia, flagged a campaign that avoided middle men.
"We're looking at going direct and using the Internet," he told a press conference.
Tiger Airways is the latest entry into Asia's fledgling but rapidly growing budget airline industry.
Malaysia's AirAsia is seen as the region's leading no-frills carrier but most of its routes are within the country and its efforts to secure landing rights in neigbouring Singapore have been thwarted.
However AirAsia's routes will take on a regional flavour when the carrier begins flying to Bangkok from February.
Malaysia's Athena Air Services and Indonesia's Lion Air are other Asian no-frills carriers, while a Singapore consortium called Valueair also intends to take off next year.
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