SIA foresees closer ties between Scoot, Tigerair

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Singapore Airlines sees closer knit operations between Scoot and Tigerair as key to improving the performance of both low-cost carriers.

“As a major shareholder we are of course concerned with Tigerair’s performance,” says SIA chief executive Goh Choon Phong.

“That is the reason why when the Tigerair board approached us to ask if we could allow one of our senior executives to join Tigerair and help it with its turnaround, we said it we could do so.”

Goh was referring to Tiger Airways Holdings’ announcement earlier this week that SIA veteran Lee Lik Hsin would replace Koay Peng Yen at the head of the ailing low cost carrier, which is 40% owned by SIA.

The announcement came days after Tigerair reported a S$52 million ($41.5 million) net loss for its FY2014 financial year ended 31 March.

“Closer cooperation between Tiger and Scoot will go a long way to strengthening both carriers,” Goh adds.

“At this point of time, it’s particularly difficult for operators in this part of the world given the big growth in capacity. Capacity is something no single carrier can control because it is a market.”

He adds that overcapacity is not something that will continue “in perpetuity,” because ultimately supply and demand will balance out.

“Scoot is on track in terms of its business plan, and the addition of fuel efficient 787s [at the end of 2014] will put it in strong standing for future growth. The alignment between Scoot and Tiger is strong and that’s the reason we believe it makes sense for them to cooperate closely together.”

Scoot and Tigerair (then called Tiger Airways) signed an interline agreement in October 2012 to market joint itineraries for select destinations to Australian travellers. In December 2013, Scoot and Tigerair entered an interline agreement to connect passengers through Singapore, but this is still pending regulatory approvals.

One potential challenge to closer cooperation is the overlap between the networks of Scoot and Tigerair – although Scoot is billed as a long haul low cost carrier, and Tigerair a regional low-cost carrier. FlightMaps Analytics shows the pair compete on four key routes: Perth, Bangkok, Hong Kong, and Taipei.