SpiceJet and Tigerair Ink Deal

Friday, 20th December 2013 at 04:41am

The airline industry is seeing some interesting developments lately. India, for one, has amended its policies, leading to foreign airlines entering into a partnership with its local airlines. One example of such is the recent agreement between SpiceJet and the Singapore-based Tiger Airways.

The year 2013 was generally a year full of positive notes for India's aviation industry, who, in previous years, was rocked with financial difficulties resulting to the untimely demise of Kingfisher Airlines.

As a response, the Indian government amended its FDI policy in the hope of attracting foreign companies to infuse much-needed capital to the ailing local airlines. Since then, at least three major foreign-based airlines suddenly got interested in the local aviation industry through joint ventures with Indian conglomerates.

The latest partnership to take shape is between SpiceJet and Singapore-based Tigerair. The partnership, though, is nothing more than an interline agreement with both airlines giving each other the rights to sell tickets other their own. This means, Tigerair can sell SpiceJet tickets along with its own and vice versa.

Tigerair is partly owned by Singapore Airlines who, incidentally, has partnered with Tata Group to set up a new airline in India.

Tigerair is a direct competitor of AirAsia in the regional market with the latter obviously taking the big advantage over the former. So, wherever AirAsia is going, Tigerair is not far behind, literally speaking. Seems like Tigerair is working its way to rain on AirAsia's parade.

So it is not surprising to see Tigerair and AirAsia together, this time, in one of the world's fastest growing travel markets, India. They are together in India not for a union but more probably slug it out for better position in the local market.

While its partnership with SpiceJet is not yet comparable to what AirAsia has with Tata Group, industry analysts see a probable capital investment in India from Tigerair in the near future, possibly forming a joint venture with SpiceJet to set up a local subsidiary. That's all speculation for now.

India, as of late, has become a magnet for foreign-based airlines who want to take part in the country's massive and fast-growing travel market through joint ventures and other forms of partnership. Etihad has already finalized its acquisition of a 24% stake in Jet Airways.

AirAsia India is already preparing to launch its maiden operations, tentatively in the first quarter of next year. The local subsidiary of Asia's largest budget carrier is a joint venture between Tata Group and Malaysia-based AirAsia Bhd. Tata Group is also entering into another agreement with Singapore Airlines to form another local airline, this time a full-service airline.

The partnership between SpiceJet and Tigerair, though, will not impact the local aviation industry. Furthermore, it will not, in any way, satisfy SpiceJet's hunger for much-needed capital to trim down losses and payment obligations.

In the meantime, SpiceJet will need to woo Tigerair to get into a more meaningful union, perhaps through a joint venture or substantial stake purchase agreement to make an impact in the country's local aviation market.

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