Cebu Pacific Purchases Tigerair Philippines, Forms Strategic Alliance

Cebu Pacific, the largest budget carrier in the Philippines, and Tigerair Group, the largest budget carrier in Singapore, have announced that they have entered into a strategic alliance with Cebu Pacific purchasing 100 percent ownership of Tigerair Philippines for an estimated $15 million. Under the agreement, both parties will collaborate operationally and commercially on domestic and international air routes to and from the Philippines. The synergies of the two companies will create the largest network of flights to the Philippines.

The strategic alliance is designed to embrace the collective strengths of each carrier to form synergies and efficiencies that will enhance network coverage, customer service, and flight frequencies. In addition, the two carriers intend to jointly market routes utilising codeshare and interline agreements. Common routes to and from the Philippines and Singapore will be jointly operated. However, the alliance is still subject to regulatory approval.

According to Executives at each airline, the new strategic alliance will be a benefit not only for the airlines but for passengers as well. "Tigerair and Cebu Pacific share a vision for both airlines to join forces and create the largest budget airline network between Asia and the Philippines," said Koay Peng Yen, CEO of Tigerair Group. "This partnership with Cebu Pacific is consistent with our asset-light strategy, and builds upon our other alliances. We look forward to achieving greater cost savings from the coordinated operations while providing more travel options and greater convenience for our customers."

Copyright Photo: Philip Co/PPSG

Cebu Pacific President & CEO Lance Gokongwei echoed the sentiments of his Tigerair counterpart. "This strategic alliance will allow both Cebu Pacific and Tigerair to leverage on our extensive networks spanning from North Asia, ASEAN, Australia, India, all the way to the Middle East," said Gokongwei. "Our customers can expect an even wider range of travel options, and seamless travel connections while enjoying our trademark low fares."

To enhance the integration of operations and visibly identify the new alliance, both Tigerair and Cebu Pacific will brand itself as a partner of the other airline. Tigerair Philippines will continue to initially operate under the Tigerair brand. However, it remains unclear if the two entities will assume a joint brand in the future similar to AirAsia Zest. Both the Cebu Pacific and Tigerair websites will be used as a sales and distribution platforms to market routes operated by both airlines. Collaboration is also expected on other common destinations in Asia including cities such as Bangkok, Singapore, and Hong Kong.

Copyright Photo: Angelo Agcamaran/PPSG

Cebu Pacific will be acquiring 100 percent ownership of Tigerair Philippines. The acquisition of Tigerair Philippines is valued at $15 million – approximately P672 million. The acquisition cost includes the 40 percent stake of Singapore based Tigerair and the remaining equity of Filipino partners in Tigerair Philippines.

The new strategic alliance means that capital at both airlines will be more efficiently deployed. Cebu Pacific currently operates an average of 2,200 flights per week with 48 aircraft while Tigerair Philippines operates an average of 118 flights per week with 5 aircraft. With the combining of the resources of each airline, Cebu Pacific intends to provide services to high growth markets including India and Australia. In addition, Tigerair will be able to serve more passengers to additional cities in Cebu Pacific's extensive network in the Philippines and North Asia.