Tigerair losses hold back expansion

Budget airline to focus on troubled units before heading to north Asia

PUBLISHED : Tuesday, 20 August, 2013, 12:00am
UPDATED : Tuesday, 20 August, 2013, 4:41am

Tigerair, formerly Tiger Airways, will focus on cutting losses at its subsidiaries in Indonesia, the Philippines and Australia before moving on to north Asia.

The Singapore-based low-cost carrier said it had no plan to grow farther than Shanghai but would add two destinations in south China by October to cash in on the nation's travel boom.

"We are very cautious now and won't get into fast expansion [as we did in the past]," Ho Yuen Sang, the newly appointed chief operations officer of Tigerair Singapore, told the South China Morning Post yesterday.

The company needs to absorb operations by Tigerair Mandala and Tigerair Philippines which were acquired by Tigerair's parent Tiger Airways Holdings last year.

Tigerair is expanding its mainland service as its rival Jetstar is reducing operations there, making Tigerair the largest low-cost carrier in the China-Singapore market, said Brendan Sobie, the chief analyst at CAPA, a Sydney-based aviation research firm.

New services to two mainland cities will be announced within the next three months, bringing total destinations served by Tigerair in the greater China market to eight. It currently flies to Hong Kong, Guangzhou, Macau, Taipei, Haikou and Shenzhen.

As landing slots are tightly held in first-tier cities, Tigerair would focus more on second and third-tier cities, Ho said.

Tiger Airways reported S$45 million (HK$274.51 million) in losses for the year to March from a deficit of S$104 million in the previous year. Sobie said the chances of its affiliates breaking even remained unclear while the slim profit at its Singapore operations were at stake due to fierce competition and overcapacity in its home market.

It has to absorb the extra cost of S$2 per passenger due to the closing of the budget terminal in Singapore since September last year. The service charge per passenger had gone up by S$6 but Tigerair could manage to pass on S$4 to customers, Ho said.

The carrier will add five destinations from Singapore every year, on par with the delivery schedule of new planes at a rate of five to six aircraft annually by 2015. The Tiger Group will take delivery of 25 aircraft by 2015.

The airline has rebranded itself and removed the iconic tiger from its logo, leaving only the tiger stripes and tail in its livery.