MANILA – (UPDATED 12:46 a.m., Jan. 3) Cebu Pacific is in talks for the acquisition of the Philippine unit of Singapore-based Tiger Airways, sources familiar with the matter told InterAksyon.com.
A source from another airline said Cebu Pacific is “buying” Tigerair Philippines.
An official from the Civil Aeronautics Board (CAB) said the agency has yet to receive a formal application from both airlines about the planned buyout.
The CAB source however admitted that the Department of Transportation and Communications (DOTC) had given a “heads up” about the matter as early as November.
The CAB official said the agency is now preparing should the transaction push through. The bureau approves the assignment or reallocation of flight entitlements.
In a text message to InterAksyon.com, Transport Secretary Joseph Emilio Abaya confirmed the looming buyout. “Yes, got a call from Mr. Gokongwei a month ago. No need to instruct CAB. There are established processes,” the DOTC chief said.
Representatives from Gokongwei-owned Cebu Pacific and Tigerair have yet to respond to InterAksyon’s queries as this went online.
Tiger Airways’ unit, Roar Aviation II Pte Ltd, earlier acquired a 40 percent stake in Southeast Asian Airlines (Seair) from its existing foreign shareholders for $7 million. The remaining 60 percent stake in the Philippine budget airline is owned by Filipino shareholders led by Tomas B. Lopez.
The Centre for Asia-Pacific Aviation (CAPA) earlier said mergers and acquisitions (M&As) are inevitable in the Philippine airline business amid an 84-percent penetration rate, which is considered high in the region.
The Philippines’ penetration rate is higher than Thailand’s 58 percent, Indonesia’s 57 percent, Malaysia’s 49 percent and Vietnam’s 29 percent.
CAPA said there are “too many” low-cost carriers (LCC) in the Philippines, with the “over-capacity and irrational competition” resulting in losses for budget airlines other than Cebu Pacific.
Last year, the Philippine unit of Malaysia’s AirAsia acquired 40 percent of Zest Airways Inc, which is owned by Zest-O juice maker and former ambassador Alfredo Yao.
With this acquisition, the number of budget airlines in the country has gone down to four, namely AirAsia Zest, Cebu Pacific, PAL Express and Tigerair.