China Airlines, Tigerair to set up Taiwan budget carrier

SINGAPORE - Singapore budget carrier Tigerair and Taiwan's China Airlines said Monday they would set up a new no-frills airline to tap growing demand for cheap travel in Asia.

Tigerair Taiwan will have a paid-up capital of Tw$2 billion (S$84.7 million), with the Singapore-based carrier holding a 10 per cent stake, the two airlines said in a statement.

China Airlines, Taiwan's leading airline by fleet size, will hold the remaining 90 per cent.

Tigerair said in the statement the new airline will be managed as a standalone entity but will utilise its website as well as sales and distribution platforms.

"The new JV (joint venture) will allow us to extend our presence into the new untapped markets of Taiwan, Japan and Korea," said Koay Peng Yen, group chief executive of Tigerair.

Sun Hung-Hsiang, chairman of China Airlines, said: "China Airlines' knowledge of the Taiwan market coupled with Tigerair's expertise in the no-frills sector should stimulate demand in the civil aviation market here."

The formation of the new carrier comes just a month after TransAsia Airways, Taiwan's first private airline, secured government approval to set up a so-far unnamed budget subsidiary.

Demand for discount flying has been rising in Asia. Currently 12 foreign budget airlines, including Malaysia-based AirAsia and Japan's Peach Aviation, offer services to and from Taiwan.

Singapore's Tigerair, which was previously known as Tiger Airways before a rebranding exercise this year, has been looking for expansion opportunities in Asia.

Last year, it bought a 33 per cent stake in beleaguered Indonesian carrier PT Mandala Airlines. In March, it raised more than S$297 million to fund its Asian expansion plans.

Its shares rose 2.00 per cent to Sg$0.51 in mid-day trade Monday after the announcement.