While the fate of Tiger Australia remains uncertain, the Singapore listed franchise’s investment in the Indonesia carrier, Mandala Air, is being strengthened by its backing for a $1.6 billion list price acquisition of 18 more Airbus A320s for delivery by the end of next year.
The deal will more than treble the size of the Mandala operation from seven A320s this year to 25 by the start of 2015, although it will remain a very small player in the rapidly growing market for domestic flights in Indonesia.
The ACCC has yet to rule on an application by Virgin Australia to take a controlling 60% stake in Tiger Airways Australia, a move which would if permitted allow Virgin to challenge Qantas with its own second brand in competition with Jetstar.
Tiger Airways Holdings in Singapore has made it abundantly clear that its currently wholly owned Australian Tiger subsidiary is making unsustainable losses and will face closure unless the Virgin deal is approved.
However the CEO of Virgin Australia, John Borghetti, is on the public record in refusing to give any guarantees as to the future size of Tiger in Australia if he is allowed to take control of the struggling brand in this country.
If Virgin Australia gets approval to buy a 60% share of Tiger, in additional to its acquisition of WA based regional and resource industry carrier Skywest, the group’s total share of domestic market could jump by around 4% depending on the competitive response from dominant Qantas/Jetstar group.