- Tiger Airways cancels plans to Incheon-based JV, stating conditions not conducive;
- Economic downturn and protectionism to blame;
- Pressures to increase on Australian and Singapore ventures to find more routes.
Tiger Airways has scrapped plans to establish a JV airline in South Korea, citing the global economic slowdown and regulatory uncertainties. Tiger and its 51% local partner, the Incheon Metropolitan City Government, stated the climate is "not conducive to the successful launch of a new airline at this time".
The carrier, which was originally due to commence operations in Aug-09, had rescheduled its launch for 2009 after encountering delays in its application process. Incheon Tiger Airways had intended to operate from South Korea to China, Japan, east Russia and Mongolia with an initial five A320s.
Two South Korean budget carriers, Yeongnam Air and Hansung Airlines, suspended services in 2008, due to rising competition and weak demand.
But regulatory uncertainties (ie protectionism) are understood to have been the major hurdle. In Aug-08, the Korean Ministry of Transport failed to reject a protectionist request led by its national airline to turn back the clock of liberalisation in the region. The request from several vested interests - worded in clear aviation nationalism overtones - was designed solely to protect local airlines from added competition - and the lower fares that competition would bring. For more information, see CAPA's perspective: Korea steps back into the dark. Airline protectionism flourishes in Seoul, 28-Aug-08).
The Tiger Aviation Group has seven A320s scheduled for delivery in 2009. It is unclear how the failure of its Korean venture to launch will impact on the group's fleet deployment, though it is expected to put additional pressure on the Australian and Singapore operations. A Tiger spokesman was not immediately available to comment.
Tiger is opening a base in Adelaide in Mar-09 and could accelerate plans to find a third base in Australia, while the opening of the Singapore-Malaysia market is providing some opportunities for Tiger to expand its capacity in those markets. Tiger's search for other cross-border JV activities is meanwhile expected to continue, despite the Korean setback.
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