Preference for budget carriers to help Tiger Airways: OCBC

PHOTO: Preference for budget carriers to help Tiger Airways: OCBC

SINGAPORE - Tiger Airways Holdings Ltd 's prospects are bright as industry dynamics continue to favour budget over premium carriers, analysts at OCBC Investment Research said, unfazed by an 8 per cent year-to-date loss in its share price.

Tiger Airways, in which Temasek Holdings Pte Ltd holds about one-third stake, reported a 36.4 per cent rise in passenger traffic in May from a year earlier.

Asia Pacific remains a high growth region for the aviation industry, and the initial public listing plans of a few Asia-based budget airlines reinforced this view, OCBC said in a research note.

"we believe that the market is large enough to absorb the growth in capacity as aircraft per capita remains lower in the region versus the more developed markets of North America and Europe," OCBC said.

"Increases in consumer demand for air travel (resulting from greater affluence) should outpace the growth in aircraft deliveries to the region."

Southeast Asia budget airlines, including Tiger, have been looking to expand capacity as they tap into booming air travel demand across the region.

OCBC maintained a "buy" rating on the carrier with fair value estimate at S$0.79.

The stock traded at S$0.625.