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SINGAPORE: Budget carrier Tiger Airways is forming a new low cost carrier (LCC) with Thai Airways.
Pending regulatory approvals, the new airline will be called Thai Tiger Airways and is expected to start operations in the first quarter of 2011.
Thai Airways and a Thai entity will collectively hold 51 per cent of the new airline, while Tiger Airways will hold 49 per cent.
The Thai Tiger Board will consist of three nominees from Thai Airways and two nominees from Tiger Airways, with the chairmanship being held by Thai Airways.
The new airline will operate the same low fare, low cost model as the Tiger Airways units.
Based in Bangkok, Thai Tiger will operate international and domestic flights out of Suvarnabhumi International Airport.
It will offer short-haul, point-to-point services within a five-hour flying radius.
The airlines said the route network and further information on the corporate structure will be announced in due course.
Tiger Airways CEO, Tony Davis, said the new carrier will be well positioned to serve destinations in North Asia and the Indian sub-continent.
The new carrier will operate a consistent Airbus A320 aircraft fleet, in line with other airlines in the Tiger Airways Group.
Industry watchers said the match-up is a win-win formula for both parties.
Shukor Yusof, aviation analyst, Standard & Poor's, said: "For Thai Airways, instead of having to set up from scratch an LCC, it has an existing template in Tiger Airways that it could use in expanding the IndoChina market and Thailand.
"Irrespective of the problems that they've had in the past few months, it's still a huge tourist destination, huge demand for travel. It's a huge market, so there's enough potential for Thai Tiger to come in there."
This latest Thai-Tiger Airways collaboration is yet another sign that the low cost carrier business is growing significantly in Asia Pacific.
Industry experts believe the low cost carrier business is likely to grow from the existing 20 per cent to up to 35 per cent come 2015 with the rationalisation of open skies within the ASEAN region.
All these can only mean one thing for consumers - cheap air fares for the long term.
Mr Davis said: "The low cost airline sector is still quite small in Asia. I think airlines like Thai Airways want to participate, in the same way SIA wanted to participate ...
"But it doesn't mean that we end up joining former alliances or connecting our networks or offering any special services for each other's customers. It's a financial investment, it's a strategic investment, it's not a commercial partnership."
When asked to comment about the addition of another budget carrier, Jetstar told Channel NewsAsia that it "always welcomes competition".
Jetstar said its "focus remains on ensuring we consistently deliver the lowest fares and on maintaining our leading position in Asia."
It added that over the last 12 months, it has grown its operations from its Singapore and Asian hub by 47 per cent, and it will continue to roll out its growth plans.
- CNA/jm/al
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