Tigerair has never seen a profit from its Indonesian associate, and its losses continued to climb in the fiscal 2014 third quarter.
In the three months ended 31 December, its share of loss from Tigerair Mandala amounted to Singapore dollar (S$) 11.2 million ($8.7 million), up from S$ 7.4 million the quarter before.
Tigerair Mandala operates a fleet of nine Airbus A320 aircraft, covering 18 international and domestic routes. Tigerair has a 36% stake in the carrier.
In a results call with reporters, Tigerair chief executive Koay Peng Yen says the carrier is reviewing routes to determine “which are sustainable, which are not”, and will work to reassign capacity.
“We are looking at reassigning capacity, focusing more on international routes. We believe Tigerair Mandala has better competitive advantage on some international than domestic sectors,” he says.
Koay's comments follow the unit's suspension of its Jakarta-Medan route on 14 January.
Indonesia is a challenging and crowded market with giants Lion Air and Garuda Indonesia having clear dominance. There has also been overcapacity in the Singapore-Indonesia market following a new air services agreement last year.
As part of its turnaround plan, Tigerair Mandala will also look at how it can improve pricing and enhance yields on its flights, as well as improving operating costs through better productivity, says Koay.
The Indonesian unit will also enter into a strategic alliance with Cebu Pacific, expanding its network into the Philippines.
Koay adds that there are currently no aircraft from Tigerair’s order books allocated to the Indonesian unit. Last November, however, SMBC Aviation Capital announced that it has signed lease agreements with Mandala Airlines for two A320s.
Tigerair posted an operating loss of S$8.8 million for the third quarter, a reversal from the S$17.9 million profit it posted a year before. The group’s net loss for the period was S$119 million, compared to a profit of S$2 million a year before.