Singapore Still Going Down LCC Route With Tiger

25 Oct 2014 03:56:15

news.airwise.com

Singapore Airlines is injecting more cash into Tiger Airways, illustrating its resolve to persevere in the low-cost segment after the budget affiliate bowed out of three regional markets.

The flag carrier plans to have Tigerair cooperate more closely with its medium- and long-haul budget airline Scoot, people familiar with the company's strategy said. The aim is for a resource-sharing relationship akin to that SIA has with premium regional subsidiary SilkAir.

Bringing Tiger under its control is a gamble for SIA because the budget carrier has a tiny passenger base in Singapore following its withdrawal from other markets. But the budget sector is growing quickly as rising incomes mean low-cost travel is becoming increasingly affordable in Southeast Asia's highly populous countries.

"Tiger and Scoot are just distinguished by the type of aircraft and how far they fly. Essentially, they are low cost in model," said one of the people, who were not approved to speak to the media and so declined to be identified. "The key is operational efficiency - ticketing, check-in, luggage routing."

SIA said last week it would raise its stake in Tiger to about 55 percent from 40 percent. It would also buy up to SGD$140 million (USD$110 million) of a SGD$234 million rights issue, taking its stake to 71 percent.

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