Regional Round-Up
Virgin's Tiger deal kept waiting
April 1st 2013
Virgin Australia’s bid to return to the low-cost budget airline business by buying a controlling 60% stake in Tiger Australia has hit a snag. The Australian Competition and Consumer Commission (ACCC), which had been due to hand down a ruling on whether to allow the deal to go ahead by mid-March, has delayed its decision. It said it wants more information from Virgin and needs more time. Read More »
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| Virgin Australia CEO, John Borghetti: threatened to walk away from deal |
The ACCC has voiced concerns the deal will reduce competition in the Australian domestic market. Tiger Australia is a subsidiary of Tiger Airways Singapore, currently owned by a group of shareholders including Singapore Airlines (SIA), which holds more than 30% of the carrier. Inv turn, SIA has a 10% stake in Virgin Australia.
The competition watchdog appears to be wary that if it allows the deal to go through Australia’s domestic market would return to a duopoly, Qantas Airways and its low-cost carrier Jetstar, and Virgin Australia with Tiger.
It is also understood the ACCC may be considering asking Virgin to give a binding commitment on its fleet plans for Tiger. Virgin chief executive, John Borghetti, has said Tiger’s fleet could be tripled to 35 aircraft within five years depending on the state of the market.
He has threatened to walk away from the deal if the ACCC tries to force Virgin to make a firm fleet commitment. He has argued that the deal will create jobs, boost tourism and mean cheaper fares.
