Tiger places big bet on Indonesia with re-launch of Mandala

Tiger Airways is banking the booming Indonesian market can support another new carrier and absorb over the next 14 months at least 10 A320s from the struggling airline group's surplus fleet. Singapore-based Tiger has not yet invested a penny into Mandala Airlines but has a lot at stake as the Indonesian carrier plans to resume services in April following a 15-month hiatus, using Tiger's aircraft and business model. While it only had to pay a token one dollar for its 33% stake in Mandala, Tiger along with Mandala's other new investors will be providing a loan to cover re-launch costs and will need to continue pumping in capital until the airline becomes profitable, a potentially challenging proposition given current market conditions in Indonesia.

The new Tiger-backed Mandala will compete against three powerful LCCs in the Indonesian market - Lion Air, Indonesia AirAsia and Garuda Indonesia budget unit Citilink. These carriers combined now operate about 100 aircraft and are all expanding at high double-digit rates. Mandala will also have to compete against Garuda's fast-expanding mainline operation and three second tier Indonesian carriers - Batavia Air, Sriwijaya Air and Merpati Nusantara Airlines - which also currently operate a combined fleet of about 100 aircraft and offer low fares, although they are not generally considered to be LCCs.