CEBU Pacific Air, the Philippines’ biggest low cost carrier, is acquiring 100% ownership of Tigerair Philippines, the local arm of Singapore-based Tiger Airways Holdings Ltd., for US$15 million, creating the biggest network of flights in Southeast Asia.
Under a deal announced in a disclosure to both the Philippine Stock Exchange and Singapore Stock Exchange, Cebu Pacific will buy all of Tiger Airway’s 40% stake in Tigerair Philippines as well as the 60% owned by Filipino businessmen.
The deal, which is subject to approval by Philippine and Singapore regulators, takes the consolidation in the local aviation industry further, leaving Cebu Pacific just two other competitors – flag carrier Philippine Airlines and AirAsia Zest.
The acquisition is part of the strategic alliance both carriers have entered into that calls for collaboration commercially and operationally on international and domestic air routes.
“Tigerair and Cebu Pacific share a vision for both airlines to join forces and compete more effectively in the regional market. Through this strategic alliance, we aim to establish a win-win partnership to forge a more competitive Tigerair,” Tigerair Group chief executive officer Koay Peng Yen said in the disclosure.
“We also look forward to achieving greater cost savings from the coordinated operations while providing more travel options and greater convenience for our customers,” Yen added.
The alliance will allow both carriers to harness synergies and efficiencies to enhance their network coverage, flight frequencies and customer service, and jointly market their routes using codeshare and interline arrangements, Cebu Pacific said.
A codeshare agreement is an aviation business arrangement where two or more airlines share the same flight while an interline agreement allows airline partners to accept each other’s travel tickets.
The alliance will jointly operate common routes to and from Singapore and the Philippines.
Cebu Pacific clarified that each carrier will brand itself as partner of the other airline while Tigerair Philippines will initially continue to operate under the Tigerair brand, adding that management team and CEO, Olive Ramos, will be retained.
The carriers also expect to collaborate on other common destinations in Asia.
“This strategic alliance will allow both Cebu Pacific and Tigerair to leverage on our extensive networks spanning from North Asia, ASEAN, Australia, India, all the way to the Middle East. Our customers can expect an even wider range of travel options, and seamless travel connections while enjoying our trademark low fares,” Cebu Pacific president and chief executive officer Lance Gokongwei said.
Gokongwei said Cebu Pacific is committed to growing Tigerair as an independent franchise after the takeover, and that the former does not anticipate anti-competition issues with Philippine regulators.
Tigerair Philippines operates an average of 102 flights per week with five aircraft to 12 domestic and international destinations from its bases in Manila and Clark.
Cebu Pacific, on the other hand, operates an average of 2,200 flights per week with 48 aircraft to 24 international and 33 Philippine cities in its network.
By combining their resources, Cebu Pacific will be able to provide services to high-growth markets including Australia and India, while Tigerair will be able to fly more passengers to additional cities in Cebu Pacific’s extensive network in the Philippines and North Asia. This arrangement allows both airlines to deploy capital more efficiently.
Highlights of strategic alliance are the following:
• Common routes – Both carriers will jointly operate common routes between Singapore and the Philippines.
• Connectivity – Both carriers will jointly sell and market their routes using codeshare and interline arrangements, thereby expanding their network coverage and enhancing connectivity.
• Corporate identity – Both carriers will brand themselves as partners by endorsing each other’s logo within their own. Accordingly, Cebu Pacific’s logo will carry the tagline: “A network made wider with Tigerair” and vice versa.
Meanwhile, Tigerair Philippines is also seeking renewal of its permit to operate domestic flights from the Civil Aeronautics Board. The CAB hearing is scheduled for Jan. 23. ––Roumina M. Pablo