China Airlines to launch budget carrier with Tiger
December 17, 2013, 12:08 am TWN
TAIPEI--Taiwan's China Airlines (CAL, 中華航空) announced a joint venture with Singapore's Tiger Airways Monday to set up a Taiwan-based low-cost service to tap into the growing budget travel market.
CAL will invest NT$1.8 billion (US$61.02 million) to take a 90 percent stake in the new carrier, to be named Tigerair Taiwan, which will have capital of NT$2 billion, the company said. Taiwan currently does not have any budget carriers of its own, although there are 13 foreign budget airlines that operate in the country.
At a press conference at which the announcement was made, CAL Chairman Sun Huang-hsiang (孫洪祥) said the new venture will begin operations by the end of 2014, providing passengers with another option for flight services.
According to Sun, travelers using budget carrier services pay lower prices and are free to choose whether they want to pay for value-added services such as meals and checked-in luggage.
Tigerair, founded in 2004, is part of the Singapore Airlines group and the leading low-cost carrier in the city-state. Its CEO, Koay Peng Yen, said the cooperation will help the company make inroads into the Taiwan, Japan and South Korea markets.
With the abundant experience of the two companies in the business, they are confident of building a competitive budget carrier, Koay said.
CAL's move came one month after TransAsia Airways (TransAsia), one of Taiwan's smaller airlines, announced a decision to set up a low-cost carrier subsidiary, which is expected to become operational next year.
Budget airlines made up less than 4 percent of international flights to and from Taiwan last year, but the ratio grew to 5.7 percent in the first 10 months of this year, according to statistics compiled by the Civil Aeronautics Administration (CAA).
Over that period, 1.85 million passengers took low-cost airlines, nearly double the figure of 930,000 for last year, CAA data shows.