Tiger Air looks to carve out a new low cost market in Taiwan

SINGAPORE/BANGKOK - Competition in Asia will continue to intensify in 2014 as both Singapore-based carriers Tiger Air and SCOOT are entering into new joint venture agreements. Tiger Airways is now embarked into a race to expand with the possible ambition to reach one day a size comparable to its arch rival AirAsia.

Latest field of expansion is Taiwan. The Island is turning increasingly into an attractive destination for airlines as it is ideally located between North Asia (Japan, Korea and China PRC) and Southeast Asia. Another asset for Taiwan is the relative reluctance of Chinese authorities to allow more low cost carriers competing with its own airlines. Taiwan, which is already linked to over 40 destinations in China, appears as a credible alternative to conquest the Chinese world.

Tigerair has then been able to tight up with Taiwan-based de facto national carrier China Airlines for the creation of the country’s first ever local low cost airline. Tigerair will hold a 10 per cent stake in the future TigerairTaiwan. In a statement, Tigerair said the new carrier will also extend its presence into the new and largely untapped markets of Taiwan, Japan, and Korea. The new carrier plans operate 12 planes by 2017.

The choice of Tigerair by China Airlines is an acknowledgment by legacy carriers of the importance of low cost airlines’branding. China remains one of the most underserved markets for low cost airlines as the government continues to defend the position of the Mainland’s major carriers. Flying from and to Taiwan on a low cost carrier could help consolidating Taiwan’s own airlines.

SIA's long-haul budget carrier Scoot also announced recently its talk with Nok Air in Bangkok to establish new low-cost player NokScoot. The future airline would be based at Don Muang International airport and probably go into competition with the future Thai AirAsia X as it mostly target the long haul-low cost segment. Scoot will own 49 percent of its venture in Thailand while Nok Airlines will own the rest of the venture. Tigerair recently announced also to have sealed an agreement with India’s budget carrier SpiceJet to allow passengers to connect on each other flight. The agreement has a three-year validity.

Traffic on Asian discount airlines has tripled since 2008, according to data compiled by Bloomberg, with passengers traveling 114 billion kilometers in 2012, compared with 37 billion kilometers in 2008. The market share of budget carriers is increasing year after year, as it reached 29% growth.

Sourced: TravelDailyNews