Tiger Airways Pte, the budget airline unit of Singapore Airlines Ltd., will set up an airline in South Korea in partnership with the Incheon city government to take advantage of growing passenger traffic in Asia.
Tiger Airways will own 49 percent of the carrier and the Incheon city government will own 51 percent, Singapore-based Tiger said in a statement today. The new airline will be called Incheon Tiger Airways.
Closely held Tiger has been expanding flights to Australia, India and China as economic growth in the Asia Pacific region enables more people to fly. The region’s airline passenger traffic growth will likely outpace the global average until 2010, according to the International Air Transport Association.
“We are poised to be in a strong position to tap emerging travel trends in the region,” Tony Davis, Tiger’s chief executive officer, said in the statement.
Passenger traffic worldwide will rise 29 percent by 2011 to 2.75 billion people, helped by growing wealth in the Middle East, China and India, the International Air Transport Association said Oct. 24.
The joint venture — the first instance of a South Korean carrier being set up with an overseas airline as partner — will challenge Korean Air Lines Co. and Asiana Airlines Inc. for passengers in Asia’s fourth-largest economy.
Korean Air, the nation’s largest carrier, said in June it plans to set up a low-cost unit within three years to compete with other budget airlines. South Korea now has two budget carriers, which sell tickets for as much as 30 percent less than full-fare airlines.
Incheon Tiger Airways expects to carry two million passengers in the first year of flights, Davis told reporters at a press conference. The carrier will focus on the domestic market and will later fly to north Asia, Russia and Mongolia, he said.
Incheon International Airport is the biggest in South Korea and serves the capital Seoul. It handled 23.5 million passengers in the first nine months of this year, 15 percent more than a year earlier, according to its Web site.
Tiger, 49 percent owned by Singapore Airlines, still needs government approval to start the airline, the statement said. The venture expects to start flights in 12 months and will have an initial fleet of five Airbus SAS A320 aircraft, which will eventually double to 10, Davis said.
Singapore-based Tiger in June ordered 30 A320 aircraft valued at $2.2 billion to cater to growing air travel demand. Tiger had two straight quarters of profit, Davis said.