A former managing director of Singapore Airlines (SIA) is considering launching the first low-cost airline in Singapore, to be known as ValuAir.

The company's backers - including former SIA chief Lim Chin Beng - are looking to operate no-frills services to nearby points in Asia. A feasibility study is being worked on by local and foreign consultants and is due to be completed before the end of the year.

One of the four directors, Jimmy Lau, says that if this confirms that operations are viable, ValuAir will seek to start services sometime in 2004 with funds from invited investors. Lau is a former managing director of the Asian Aerospace air show that is held every two years in Singapore and which is jointly organised by Airline Business sister company Reed Exhibitions Singapore.

ValuAir was registered in Singapore on 31 March. Another director is Lim Chin Beng who was managing director of SIA between 1972 and 1982, when he became deputy chairman. He retired in 1996.

Lim is well connected in Singapore business and government circles. He is a former ambassador to Japan and was Singapore's chief negotiator in talks with Japan on a free trade agreement. He currently holds the chairmanship of Asian Aerospace, Singapore Technologies Aerospace, Singapore Press Holdings and property company The Ascott Group.

Lau says "institutional investors" will be sought if the feasibility study finds that the time is right for a low-cost airline in Singapore. But he says ValuAir's directors already believe a low-cost carrier can be successful, adding that it will not seek to eat into SIA's business.

"We feel we can create a brand new market from the cost point of view," says Lau. "This is no threat to Singapore Airlines. It's a totally different product. We are looking to complement them, not fight them. We are going to be tiny next to the giant."

Although low-cost carriers have yet to come to Asia in the same way that they have in North America and Europe, some major airlines are looking at establishing no-frills subsidiaries, including SIA, which says a decision will be taken this year.


Source: Airline Business