View Full Version : SIA announce LCC "Tiger Airways"

9th Dec 2003, 19:55

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."


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.


9th Dec 2003, 20:41
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.

Hmm, could this mean they could target Darwin-Broome-Cairns
and Perth?

Don Esson
10th Dec 2003, 06:43
Perth, Darwin and Cairns are each more than four hours from Singapoire. no matter what way you look at it. That said, you'd have to think 'no' but what can be done with a Tiger in the tank?

:) :)

10th Dec 2003, 15:42

Wednesday December 10, 06:40 PM AEST

Asia's budget airline industry taking off, but no European-style price cuts

SINGAPORE, (AFP) - The future of Asia's fledgling budget airline industry is looking increasingly bright with the entry of aviation's big players but massive European-style price cuts are unlikely, analysts said.

Singapore Airlines (SIA) and the founder of successful European budget airline Ryanair became the latest to stake their claim with an announcement on Tuesday they were setting up Tiger Airways to start flying from the city-state next year.

Malaysia's AirAsia is currently the most well-established and successful no-frills carrier in the region and is planning on expanding its intra-country routes into Thailand next year.

Other players in the industry include Indonesia's Lion Air, which flies a no-frills service from Jakarta to Singapore, Orient Thai Airlines, Malaysia's Athena Air Services and Singapore's ValueAir, which expects to start flights next year.

But it is the recent rush by the major airlines to establish no-frills services that analysts and industry players believe has confirmed the future of low-cost carriers in Asia and will lead to stronger competition.

Aside from SIA and Ryanair founder Tony Ryan, Australia's Qantas Airways this week named its new budget airline, Jetstar, to counter the success of low-cost upstart Virgin Blue, which has 28 percent of the domestic market.

Flamboyant British businessman Richard Branson, who launched Virgin Blue three years ago, has said he too wants to enter the Asian market and is looking for partners.

The Sydney-based managing director of the Centre for Asia Pacific Aviation, Peter Harbison, told AFP he was "extremely bullish" on the future of the region's low-cost airline industry, especially after the announcement of Tiger Airways.

"I think this significantly steps up the level of competition and the importance of this type of model in the region," Harbison said.

"The low carrier model works best in... the short-haul point-to-point market where price is extremely important and the deciding factor is price."

Jimmy Lau, a spokesman for Singapore's ValueAir, also said SIA's decision to establish a no-frills airline would ease concerns there were too many obstacles for budget carriers to succeed in Asia.

"More importantly for us internally, what SIA is doing has validated our business model. It means the model can work in Asia," he said.

Some of the reasons previously cited for Asia being unable to replicate the European no-frills success include the relatively long distance of the routes and the lack of cheap alternative airports away from the main ones.

Europe is also regarded as having a far bigger surplus of pilots that drives the cost of salaries down and Asia does not have a common market.

Hong Kong-based ING Financial Markets aviation analyst Philip Wickham said these factors meant passengers in Asia were unlikely to enjoy the ultra-cheap flights available in Europe, where tickets can sometimes cost less than a pint of beer.

"I think you will see some cheaper flights (in Asia) but you might not see anything dramatic," Wickham said.

He also pointed out the lack of a common market meant it was highly unlikely a budget airline would be able to operate as a pan-Asian service.

Instead Wickham said the low-cost airlines in Asia will generally only be able to fly routes that begin or end at their own airport.

Nevertheless, passengers can expect to pay hundreds of dollars less for many popular destinations that currently are not serviced by no-frills airlines, analysts said.

For example Wickham said Tiger Airways' destinations will include Bali, Bangkok, Hong Kong, Jakarta, Manila and Phuket.


Buster Hyman
11th Dec 2003, 06:44
Ahh...more pussy in the sky!:} :ouch:

Kaptin M
11th Dec 2003, 07:04
It seems a little strange to me that no mention is made anywhere of SQ's regional A320 operator, Silk Air, which is capable of doing the flights slated for Tiger.

This means that SIA will now be operating 3 airlines out of Changi.

Buster Hyman
11th Dec 2003, 07:22
I didn't think Silk Air was a LCC Kaptin. (I could be wrong, it's happened once before!) ;) I just thought it was like their domestic arm of the business (Asian domestic that is)

26th Dec 2003, 10:24
i can foresee tensions between the ryanair partners and SIA. Basically all SIA want to do is use Tiger Air to protect SIA and maybe Silkair for the likes of ValuAir. They are not even going to want Tiger Air it to make any significant in roads into their market.