Singapore, Incheon scrap plans for new budget airline


SINGAPORE — Singapore’s Tiger Airways said Tuesday a plan to establish a budget carrier with South Korea’s Incheon city has been scrapped due to the worsening global economic situation.

Regulatory problems in South Korea also contributed to the decision to abandon the project for a new low-fare airline operating from Incheon’s international airport, the Singapore-based Tiger said in a statement.

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“The recent global economic situation and continued regulatory uncertainty in Korea have meant that both parties have concluded that the climate is not conducive to the successful launch of a new airline at this time,” the statement said.

Tiger chief executive Tony Davis said he was “clearly disappointed that we will cease preparations for the establishment of Incheon Tiger Airways.”

Incheon city, west of Seoul and the site of the country’s main international airport, originally planned to apply for a licence in September and launch the joint venture by the end of this year.

The city and its affiliates would have owned 51 percent of the joint venture while Tiger would have held 49 percent.

The project sparked strong protests from four South Korean budget carriers, which claimed the venture would be effectively controlled by Tiger since the city lacks airline experience.

South Korean domestic aviation law bans Korean airlines from being more than 50 percent foreign-controlled, and the local budget carriers accused Tiger of attempting to use “the mask of a Korean carrier”.

Tiger Aviation, which runs Tiger Airways, said last year it planned to start the South Korean joint venture with five Airbus A320 planes servicing domestic routes as well as destinations in Japan, China, Russia and Mongolia.

In its statement issued in Singapore on Tuesday, Tiger said aircraft due for delivery from Airbus during 2009 and 2010 will be used on the carrier’s network in Asia and Australia.

Tiger Airways is 49 percent owned by Singapore Airlines.