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China Airlines and Tiger Airways set up new budget carrier in Taiwan
Taiwan News, Staff Writer
2013-12-16 07:42 PM
Taipei- China Airlines Ltd. (TWSE: 2610) and Tiger Airways Holdings Limited, a leading Singapore-based no-frills airline, have announced a plan to jointly set up a Taiwan-based budget carrier amid increasing travel demand in the region as well as Tigerair’s ambition to extend its footprint in the Northeast Asian market.

China Airlines and Tigerair signed a deal on Sunday and held a joint press conference announcing the news Monday afternoon in Taoyuan. In the joint venture, China Airlines will hold 90 percent stake in the new carrier, with Tiger holding the remainder, with capital totaling NT$2 billion (US$67.5 million), according to a separate statement released earlier by China Airlines.

Gift for CAL's 54th birthday

On its 54th anniversary, China Airlines is making a big step to reach more customers by establishing an independently-run new budget airline which will operate under the Tigerair brand name and will mainly provide international air travel services in Northeast Asia. The new carrier, to be named Tigerair Taiwan, will utilize Tigerair’s website as its main sales and distribution platform. It will be managed as a standalone entity, with a separate board and management team.

CAL Chairman: the right time to do the right thing

"It's now the right time to work with the right person to do the right thing," said Sun Hung-hsiang, Chairman of China Airlines, at the press conference Monday. With increasing expansion of civil aviation rights, China Airlines and Tigerair recognize that now is the right time to start effective cooperation. Second, Taiwan's geographic proximity to mainland China, Japan, and Korea makes it the best base for a budget carrier due to fuel constraints. The location allows a budget carrier to reach those destinations in only 3 to 5 hours and also helps Tigerair to reach more Northeast Asian markets.

Tigerair Taiwan will begin operation after obtaining a license from Taiwan's Civil Aeronautics Administration and is scheduled to start flying from the fourth quarter in 2014 with two passenger planes in operation initially. By 2017, the total number of airplanes will reach 12.

More operational details will be decided by the separate board and management team.

Asked by media if there might be conflicts between a full-service airline and the budget airline, Sun noted that China Airlines, a full-service carrier, and Tigerair Taiwan will be targeting different groups of customers and the latter is expected to create greater new demand.

Established in 2004, Tigerair comprises four airlines, namely Tigerair Singapore, Tigerair Mandala, Tigerair Philippines, and Tigerair Australia. Collectively the group's network extends to over 50 destinations across 13 countries in the Asia Pacific region. Tigerair operates a fleet of 50 Airbus A320-family aircraft, averaging less than three years of age.

Group CEO of Tigerair Koay Peng-yen said, “We are delighted to forge this partnership with China Airlines, the leader in Taiwan’s civil aviation market. The new joint venture will allow us to extend our presence into the new, untapped markets of Taiwan, Japan, and Korea.” Koay added, “The alignment between these two companies can not only stimulate sales but also bring more visitors to Taiwan.”

Separately, Tigerair has also entered into an interline agreement with Indian carrier SpiceJet to enable greater connectivity between flights operated by both carriers.

China Airlines shares closed unchanged at NT$10.65 Monday in Taipei trading. However, Tigerair shares rose 3% after the joint venture plan was announced.

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