Cebu Pacific Interested in Acquiring Tigerair Philippines

Cebu Pacific is planning to acquire Tigerair Philippines as the airline seeks to expand its market share and local carriers continue to consolidate. 

Copyright Photo: Philip Co/PPSG

In an interview with the Philippine Daily Inquirer, the Executive Director of the Civil Aeronautics Board, Carmelo Arcilla, confirmed that in the event a deal is approved, Cebu Pacific may end up owning 100 percent of Tigerair Philippines. However, the proposed acquisition would require several regulatory approvals from the Securities and Exchange Commission as well as the Civil Aeronautics Board which will be focused on the competitive and legal implications of the proposed deal. 

"It is still under evaluation," said Arcilla. "We are looking at its effect on routes, traffic, and slots." He added that the Civil Aeronautics Board could produce a decision within the month but that it would also have to consider the legal implications. Arcilla confirmed that the Civil Aeronautics Board first learned about the intention of Cebu Pacific to acquire Tigerair Philippines last month. 

Southeast Asian Airlines, operator of Tigerair Philippines is currently a joint venture comprised of 40 percent ownership held by Roar Aviation II Pte Limited representing parent Tiger Air Singapore and the remaining 60 percent ownership held by a local group of investors led by Tomas B. Lopez. 

It is also possible that Cebu Pacific will only acquire 60 percent of Tigerair Philippines paving the way for a strategic partnership similar to the Air Asia - Zest Air deal that would see both airlines operating under separate brands but working together to maximize flight operations through collaborative efforts on slot assignments and flight entitlements. If a deal was to proceed this way, it would be the second dual-brand strategy implemented by Tiger Air after a similar deal was negotiated with Virgin Australia earlier this year. 

Cebu Pacific is anxious to expand its presence in the Philippine market in the midst of stiff competition from rival flag carrier Philippine Airlines and emerging competitor AirAsia Zest. AirAsia is currently seeking to increase its minority stake in Zest Air. While the Senior Vice President of JG Summit Holdings confirmed that Cebu Pacific "always looks into opportunities for strategic alliances and acquisitions," no specific details of a definite agreement could be disclosed at the present time. Tigerair Philippines CEO Olive Ramos reported that she was not made aware of any discussions involving a Cebu Pacific buy-out. 

In the first three quarters of 2013, Tigerair Philippines was able to attain 4.7 percent of the domestic market. On the international side, Cebu Pacific carried 16 percent of all international travellers while Tigerair only flew 1.5 percent. Tigerair Philippines has yet to report a profit since the carrier was launched. Meanwhile, Singapore Airlines has increased its stake in Singapore based Tiger Air to 40 percent. The Cebu Pacific fleet is currently maintained by a division of Singapore Airlines, SIA Engineering.