Regulator allows Virgin Australia tie-up with rival Tiger

PHOTO: Regulator allows Virgin Australia tie-up with rival Tiger

SYDNEY - Australia's competition regulator has granted Virgin Australia Holdings Ltd approval to take control of loss-making rival Tiger Australia in a move that will ramp up competition for Qantas Airways Ltd in the lucrative domestic market.

Virgin, Australia's No.2 carrier, in October announced plans to buy 60 per cent of Tiger Australia for A$35 million (S$44.5 million) and invest a further A$62.5 million to increase the fleet size to 35 aircraft from 11 by 2018.

As part of the deal, Singapore Airlines Ltd (SIA) would buy a 10 per cent stake in Virgin Australia.

The Australian Competition and Consumer Commission said it had decided not to oppose the deal on the basis that Tiger Australia, owned by Tiger Airways Holdings Ltd, was unlikely to remain in the local market without the Virgin investment.

The deal is expected to put pressure on top Australian carrier Qantas and its budget arm Jetstar.

"Virgin Australia now has the opportunity to pursue its stated objective of transforming Tiger Australia into an effective competitor to Jetstar for price sensitive travellers,"the ACCC said in a statement.