Flight Centre's managing director Graham Turner welcomes the ACCC's decision to approve Virgin Australia's 60 per cent investment in Tiger Airways and believes the arrangement will give Tiger a strong foundation for future expansion.
"Tiger's challenges in establishing a viable financial model in Australia have been well documented and it was not surprising to hear that the airlines' backers were not prepared to guarantee its long-term future in this market if the deal with Virgin wasn't approved," said Mr Turner said.
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"With Virgin's backing, it appears that Tiger is here for the long-haul and it can now become a more substantial competitor to Jetstar. This will benefit travellers because we will now have four strong mainstream airlines on domestic routes. We expect to see Tiger and Jetstar competing aggressively, just as we have seen with Virgin and Qantas during the past decade. Potentially, this heralds an exciting new era in domestic aviation. Travellers will inevitably be the winners as Tiger grows and takes on new routes and the incumbent airlines enhance their own offerings to maintain market share."
In making the announcement to approve the $35 million acquisition, the ACCC conceded that it was one of the Commission's more difficult decisions but found that Virgin's intentions were, "unlikely to lead to a substantial lessening of competition in the Australian market for domestic air passenger transport services."
Based in Singapore, the mandate of Tiger Airways is to be one of Asia's leading low cost carriers. The airline's first flight - as Tiger Singapore - departed Bangkok in September 2004. It was four years later in February 2007 that Tiger Airways announced their intention to compete directly with Virgin Australia and Qantas/Jetstar for a share of the domestic Australian market. With a base in Perth that would later expand to Melbourne, Tiger began serving Australian passengers in November 2007.
The airline currently operates an international flight from Perth to Singapore. From Singapore, Tiger has significant reach through south-east Asia – to the Philippines, Indonesia, India, Thailand, Vietnam and China. In all, the low cost airline flies to over 50 destinations in 13 countries. Around Australia, Tiger connects 12 destinations including Melbourne, Perth, Sydney, Cairns and Alice Springs.
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Koay Peng Yen is the Group CEO of Tiger Airways.
"We are delighted to receive the green light from the ACCC on this transaction," said Mr Yen.
"With this approval in place, we can now look forward to commencing discussions with Virgin on our plans to grow Tiger Australia, and enable it to compete more effectively in the Australia's budget carrier space."
Understandably Virgin are also pleased with the decision.
"We are very pleased to receive clearance from the ACCC for the proposed acquisition of 60 per cent of Tiger Australia," said Virgin Australia chief executive John Borghetti.
"There is a real opportunity to provide strong competition in the budget travel segment and bring further benefits to consumers. By partnering with Tiger Airways, we can use our local expertise to build a sustainable budget carrier, which will offer great value airfares and benefit jobs and tourism in Australia."
