Tigerair 'may exit' Philippine market

Tigerair 'may exit' Philippine market

SINGAPORE - Singapore budget carrier Tigerair could give up its 40 per cent stake in its Philippine affiliate, said a key official from the country's civil aviation authority in Manila.

Cebu Air, the country's biggest low-cost carrier, is reportedly keen to take over Tigerair Philippines, said Mr Carmelo Arcilla, executive director of the Civil Aeronautics Board.

Media reports in the Philippines yesterday quoted him as saying that the matter is being evaluated by the authorities.

"We are looking at its effect on routes, traffic and slots," he said, according to reports. A decision could be made later this month, he added.

In a statement to the Singapore Exchange, Tigerair confirmed it is in talks on a proposed transaction involving Tigerair Philippines.

No definitive agreement has been made and the company will make appropriate announcements if there are key developments.

Tigerair did not say who it is talking to and what the talks are about.

The Singapore budget carrier entered the Philippine market in 2006 when it announced a commercial tie-up with what was then called SEAir. Tigerair went on to take a 40 per cent stake in the carrier which was later renamed Tigerair Philippines.

The remaining 60 per cent stake is owned by Filipino shareholders led by Tomas B. Lopez.

Mr Brendan Sobie, a Singapore-based analyst with aviation think-tank Centre for Asia Pacific Aviation, said Tigerair Philippines has not had much success since its launch.

"It has stayed at five aircraft and there's been no growth in fleet size in the last 18 months."

Mr Sobie said while there are opportunities in the Philippines, it is a tough market with several key players including Cebu Pacific and Malaysian low-cost giant AirAsia.

By comparison, there are more opportunities in Indonesia, for example, where Tigerair also has a joint venture carrier.

Indonesia has a bigger domestic market and a lower low-cost carrier penetration rate. There is also stronger demand for flights between Singapore and Indonesia.

Mr Sobie said: "This does not necessarily mean that Tigerair should exit the Philippine market but I won't be surprised if it did so if the opportunity arises."

In this case, it is possible the talks with Cebu Pacific are being led by the majority shareholders of Tigerair Philippines, industry watchers said.

Said Mr Sobie: "If the right offer is presented, I don't think it will be a big deal if Tigerair exits the market."

karam@sph.com.sg


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