Singapore Airlines' low-cost carrier Tiger Airways may establish offshoots in other Asian countries as a way of getting around Asia's restrictive regulatory regime, writes Leithen Francis.
Tiger chief executive Tony Davis says, in relation to air service agreements, "the barriers will come down, but in the meantime we have to be creative". He says Tiger has noted Malaysian low-cost carrier AirAsia has established offshoots in Indonesia and Thailand through joint venture partnerships. "I think airlines like Tiger will have to look at similar models," says Davis.
Establishing joint ventures overseas will give Tiger access to routes it would otherwise be prevented from serving from Singapore, and free it from having to compete so much against the other two Singapore-based low-cost carriers - Valuair and Jetstar Asia - for traffic rights.
"Unlike in Europe...low-cost carriers in Asia don't have the opportunity to operate just against a legacy carrier. It has to operate against other low-cost carriers," says Davis, who declines to say which countries Tiger is looking at.
His competitors agree low-cost carriers are having to compete on the same routes because of the limited air traffic rights available. Jetstar Asia chief operating officer Con Korfiatis says the "regulatory environment remains restrictive. Countries are still very protectionist of national carriers."
He says governments need to be educated about the tourism and economic benefits that can come from further liberalisation.
Valuair chief executive Sim Kim Wee says the limited air traffic rights available have also led his airline to operate further afield. "Operating within 2h range may not allow low-cost carriers to have routes that have traffic rights available...which is why we are operating to Perth [Australia]."
Source: Flight International
