Low-cost carriers (LCC) Tigerair and Cebu Pacific have announced plans to enter into a strategic alliance.
With the highly competitive LCC landscape in Asia, which has already resulted in Tigerair reporting its second successive net and operating loss for the last quarter of 2013, the hope is that the alliance will enable both parties to leverage their respective strengths to enhance network coverage, flight frequencies, and jointly market their routes.
Subject to regulatory approval, both carriers will jointly operate common routes between Singapore and the Philippines. In addition, Tigerair will relinquish its 40 per cent stake in Tigerair Philippines to Cebu Pacific.
Tigerair Philippines currently operates an average of 118 flights per week with five aircraft to a network of 11 domestic and international destinations, from its bases in Manila and Clark. Despite the divestment of Tigerair’s 40 per cent stake, Tigerair Philippines will initially continue to operate under the brand.
The Singapore-based LCC will redeploy its aircraft to other markets – a positive move considering the consistently underperforming Philippine market, which saw a loss of S$4.5 million (US$3.5 million) in Q3 of the 2013 fiscal year. The soon-to-launch Tigerair Taiwan could be a possible destination for the redeployed aircraft, as the company looks for ways to save costs.
“This partnership with Cebu Pacific is consistent with our asset-light strategy, and builds upon our other alliances,” said Koay Peng Yen, group chief executive of Tigerair. “We also look forward to achieving greater cost savings from the coordinated operations while providing more travel options and greater convenience for our customers.”
As part of the interline agreement, both Tigerair and Cebu Pacific websites will reflect the added benefits by being sales and distribution platforms for both airlines. Customers will be able to purchase flights for both carriers on either online platforms.