MANILA, Philippines (UPDATE) - Singapore-based budget carrier Tiger Airways has announced it would buy a 32.5% stake in small Philippine carrier South East Asian Airlines (SEAIR) following a recent partnership between the two.
The move is seen to give the recently formed joint venture between Malaysia's AirAsia and a group of Filipino businessmen led by Antonio Cojuanco, and local budget airline Cebu Pacific of the Gokongwei family some serious competition, especially over the lucrative North Asia markets.
Tiger Airways chief executive and president Tony Davis said the airline will gain foothold in a "potential high-growth market" with its $6 million investment in SEAIR.
"The Philippines represents a major market opportunity for low cost airlines," Davis said in a joint statement.
"With more than 7,000 islands, a population in excess of 90 million, plus another 11 million working and living abroad, the Philippines is an important market for both international and domestic aviation."
His counterpart at SEAIR, Avelino Zapanta, said Tiger's planned acquisition of a significant stake in his airline would help it expand services.
(Watch Business Nightly's interview with Zapanta here)
Low-cost SEAIR launched services between Clark airport in the northern Philippines and Singapore last December, using Airbus A320 aircraft leased from Tiger Airways, and aided by an online marketing arrangement also with the latter.
SEAIR also began flying to Hong Kong this year.
The Clark-Hong Kong service will double to twice-daily from April 15 to meet strong demand, with the airline also planning to expand domestic operations, the statement said.
Tiger flies to 37 destinations in 12 countries in Asia and Australia.
In the Philippines, SEAIR currently flies to three destinations in the Philippines from Clark, plus from Manila to resort island Boracay.
The statement did not say when the planned purchase would be finalized, other than to say steps would be taken immediately to wrap up the deal.
A similar deal was introduced to the local airline industry in December 2010 when Malaysia-based AirAsia Berhad formally created a joint venture with Filipino businessmen.
AirAsia Philippines, a domestic airline, is a joint venture among AirAsia Berhad (40% stake) and Filipino business personalities, including Antonio Cojuangco, Marianne Hontiveros, and Michael Romero. The Filipino partners will each have a 20% stake.
AirAsia's low-cost airline venture, and now Tiger Airways' and Seair's, will go head-to-head with local budget carriers. - With a report from AFP