Singapore Airlines to launch new low cost carrier - Tiger Airways

Singapore Airlines (SIA) has signed a memorandum of understanding with three partners to establish a new low cost airline based in Singapore. The new airline will be named Tiger Airways.

SIA's partners in this new venture are Temasek Holdings, Indigo Partners (who are private investors from the USA), and Irelandia Investments Ltd (the investment vehicle of the Ryan family members who are synonymous with the successful European low cost airline Ryanair). SIA's stake in the new airline will be 49%.

Tiger Airways plans to operate a fleet of single aisle aircraft of one type, on flights under four hours from Singapore. The airline said that the type of aircraft will be selected in due course. Certification process is expected to  be initiated shortly and the airline's target is to commence operations in the second half of 2004.

The new airline will be independent and managed separately from SIA. 

Singapore Airlines' CEO Chew Choon Seng said, "We have been studying the rise and successful growth of the low fare airlines in America and in Europe, and evaluating the applicability of the low cost, no frills model in our part of the world. Our conclusion is that it can succeed here as well. It will open up and serve a new segment of the market, making air travel accessible for more people and encouraging more trips. It will complement SIA's premium service and product offering and SilkAir's regional operations."

"However, we have observed that almost all attempts by full service network airlines to operate wholly owned low fare carriers have been unsuccessful. This is because the low cost model requires completely different methods and procedures, marketing approaches and skills, and it is hard to be both premium full service and low cost, no frills at the same time. Hence our decision to have it as a 49% owned associate company rather than a majority owned subsidiary, and to set up Tiger Airways with the Ryans as partners who have the right experience, know-how and successful track record for this business model, as well as Indigo Partners whose principals are known in the industry for the financial discipline they bring to airlines like RyanAir and Continental."

"I want to emphasise that we will continue to build and grow SIA's success as a premium full service network airline through product innovation, route expansion and an unwavering focus on customer service. Likewise we will grow SilkAir as SIA's regional wing, as both serve quite different market segments from that of the new airline." Mr. Chew Choon Seng concluded.