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MANILA, Philippines – Gokongwei-led Cebu Air Inc., operator of budget carrier Cebu Pacific, is positive that it can obtain regulatory approval for its acquisition of Tigerair Philippines.
This despite concerns the deal will harm competition in the local aviation industry.
Cebu Pacific president Lance Gokongwei said he is confident that the purchase, which will produce the biggest network of flights in the Asia-Pacific region, will be able to comply with all the requirements set by regulators, led by the Civil Aeronautics Board (CAB).
On Wednesday, January 8, Cebu Pacific announced that it will shell out $15 million to buy Tigerair from its Singapore’s Tiger Airways Holdings and Filipino owners. Tiger Airways will sell its 40% stake in the Philippine affiliate for $7 million.
“We don’t anticipate any such issues but again we reiterate that we will be working very closely with providing the necessary information that the regulators require to make their respective rulings,” Gokongwei said.
On Wednesday, January 8, Cebu Pacific revealed that it will shell out $15 million to purchase the 40% stake of Tiger Airways Singapore Pte Ltd plus the 60% interest of Filipino businessman.
Gokogwei explained that the Airline Operators Certificate (AOC) of Tigerair will be kept by Cebu Pacific during the first year in compliance to a commitment made by the budget carrier to its passengers.
“Our objective here is of course to retain the current AOC of Tigerair and to fulfill all our commitments to all the passengers of Tigerair who have enjoyed the various offerings and schedules of Tigerair,” he added.
Carmelo Arcilla, executive director of CAB, said the regulator will study if the takeover will have “anti-competitive” impact on the aviation industry.
“We do not see that the competition would adversely be affected. Tigerair is a very small airline with a small market share,” Arcilla said.
Aviation analyst Centre for Aviation (CAPA) earlier urged regulators to review the deal and ensure there will be new entrants in the market to support long-term growth. CAPA said though this was unlikely with limited slots at the Ninoy Aquino International Airport.
CAPA said the deal will cement Cebu Pacific’s leading position in the domestic market.
Cebu Pacific operates an average of 2,200 flights per week with 48 aircraft to 24 International and 33 Philippine cities in its network, while Tigerair Philippines operates an average of 102 flights per week with 5 aircraft to 12 domestic and international destinations from its bases in Manila and Clark.
By combining their resources, Cebu Pacific will be able to provide services to high-growth markets, including Australia and India, while Tigerair will be able to fly more passengers to additional cities in Cebu Pacific’s extensive network in the Philippines and North Asia. – Rappler.com
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