Following the recent delisting of Tigerair from the Singapore stock exchange, Singapore Airlines (SIA) has announced its intention to form a single holding company out of its two low-cost carrier subsidiaries, Scoot (long-haul) and Tigerair (regional). The new subsidiary will be known as Budget Aviation Holdings.
The new holding company will be headed by Lee Lik Hsin, who is currently the CEO of Tigerair, while Campbell Wilson, the founder of Scoot, will take up a senior role within SIA. According to SIA’s CEO, Goh Choon Phong, the move has a come about as a result of the buy-back of the majority of Tigerair’s shares in March this year. “We launched our general offer so that we could fully realize commercial and operational synergies between Scoot and Tigerair,” he confirmed.
In a statement SIA indicated that the new holding company structure “will allow for the [full] integration and sharing of key functions, such as in sales and marketing, IT, planning and operations,” while according to Gok, it “will drive a deep integration of our low-cost subsidiaries, which are important parts of our portfolio strategy in which we have investments in both the full-service and budget aspects of the airline business.”
One of the main reasons a full merger will not currently take place is that a slew of air operator certificates and landing slots would require revision through potential anti-competition issues in what is currently a very competitive and crowded LCC market in Southeast Asia.
For the time being each carrier will retain its current branding, though Goh has also admitted that “we would not rule out [a full merger]. But for the moment, we do see a benefit in [both LCCs] having their own separate identities.”
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