(MENAFN- Khaleej Times) Singapore Airlines' budget carrier Scoot and Tiger Airways Holdings formed partnerships in Taiwan, Thailand and India as demand for budget travel grows across Asia.
Scoot will own 49 per cent of its venture with Thailand's Nok Airlines, the carrier said in a statement on Monday. Tiger Air, 33 per cent-owned by Singapore Air, separately said it will form Tigerair Taiwan with Taoyuan-based China Airlines.
The carriers are expanding through tie-ups as they seek to attract more cost-conscious travelers amid rising competition from AirAsia and other budget airlines in the region. Overcapacity among Asian low-cost carriers is driving down ticket prices and airlines need strong revenue growth, according to Bloomberg Industries research.
"Competition in north Asia is intensifying," K. Ajith, an analyst at UOB-Kay Hian in Singapore, said by phone. The agreement "gives Tiger a foothold into north Asia so it could feed air traffic into Singapore. It's a way of taking on competition".
Tiger Air separately announced a three-year pact with Indian discount carrier SpiceJet that would allow flight connectivity between the airlines. It also signed an alliance with Scoot to expand their cooperation.
Market share
China Airlines, Taiwan's largest carrier, was unchanged at NT$10.65 at the close in Taipei trading. Tiger rose three per cent in Singapore while SpiceJet jumped as much as 12 per cent, poised for the biggest gain since April 25, in Mumbai trading.
Tigerair Taiwan could be profitable in three years, China Airlines Chairman Sun Huang-Hsiang told reporters in Taoyuan, Taiwan, today. The new carrier will operate 12 planes by 2017, Tiger Air Managing Director Ho Yuen Sang said.
Low-cost carriers are increasing market share in Asia faster than anywhere else in the world, with capacity in the region rising 29 percent in the six months to June compared with 0.8 per cent in Europe and 1.5 per cent in north America, Amadeus IT Holding said in a blog post on October 28.
Traffic on Asian discount airlines has tripled since 2008, according to data compiled by Bloomberg, with passengers travelling 114 billion kilometres in 2012, compared with 37 billion kilometres in 2008.
Tiger Air has fallen behind AirAsia and Qantas Airways as the two carriers have expanded their operations over the past two years, according to Bloomberg Industries data. AirAsia is establishing an affiliate in India and expanding in the Philippines.
"The new JV will allow us to extend our presence into the new, untapped markets of Taiwan, Japan, and Korea," Koay Peng Yen, Tiger Air chief executive officer, said in a statement on Monday. "There is vast potential for growth in these markets and also areas of synergy to be explored between the two airlines." The airline plans to operate 70 planes by the end of 2015, Koay said.
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