SINGAPORE (Reuters) - Singapore’s low-cost carrier, Tiger Airways Holdings Ltd, will start its Indonesian joint venture PT Mandala Airlines in April and gradually boost its fleet size to 10 new Airbus A320 jets over the year, chief executive Chin Yau Seng told Reuters on Monday.
The move will enable Tiger TAHL.SI, 33 percent owned by Singapore Airlines Ltd (SIA.L) (SIAL.SI), to tap one of the world’s fastest-growing air transport markets. Mandala will have the same fleet size as Tiger’s operation in Australia by March 2013.
Tiger completed its acquisition of a 33 percent stake in the troubled Indonesian carrier in January and leased two Airbus A320 planes to Mandala. Last week, the airline successfully reactivated its license and said it will resume flights in April.
Chin said the carrier is scheduled to take delivery of 10 Airbus A320s during the 2012-2013 financial year, of which two will be used to replace aircraft that it will return to the lessor and the remaining eight will go to Mandala.
Before he moved to Tiger, Chin oversaw SIA’s cabin crew operation, which is seven times bigger than Tiger’s entire workforce of 1,000 people.
Chin declined to give details about the routes Mandala will fly from its base in Jakarta, apart from saying it will serve domestic and international destinations.
Mandala will compete with Indonesia’s Citilink, the low-cost unit of flag carrier Garuda Indonesia Tbk (GIAA.JK) and with Indonesia’s Lion Air, which recently ordered $22 billion worth of new aircraft from Boeing (BA.N).
Chin said he will focus on filling Tiger’s planes over the next year rather than pushing for higher yields from each passenger. Yields have been under pressure over the past year due to deliveries of new aircraft.
Last year, Australia’s aviation regulator imposed a five-week flight ban on Tiger’s operation there due to safety issues, which prompted SIA to assign Chin to help the recovery.
Tiger’s Australian problem, combined with excess capacity in its Singapore operation, led to a loss of S$87.9 million in the first nine months of the 2011/2012 financial year, a reversal from its profit of S$38.5 million in the previous year.
“In Singapore we are slowly narrowing the gap in terms of the capacity growth, so demand has to catch up. Once we mop up the excess capacity, we are in a better position to build up the yields,” Chin said.
He said the Australian operation has been progressively returning to pre-suspension levels and Tiger will utilise its 10 aircraft in the country in the second half of 2012, up from between six to seven currently.
For the first nine months of the financial year ending in March 2012, Tiger saw its capacity, measured in terms of available seat kilometres, rise by 12.2 percent, but the number of passengers fell 5.3 percent.
Tiger now operates 34 Airbus A320 aircraft and will boost its fleet size to 68 planes by December 2015.
Reporting by Harry Suhartono; Editing by John O'Callaghan and Matt Driskill