Tiger takes on bear market

Tiger Airways issued a press release today announcing that it is seeking $225 million to help fund aircraft and engine purchases.

This news itself was not that interesting. After all, airlines are always seeking to borrow money or do sale leaseback deals following aircraft acquisitions.

But what is interesting is that Tiger is actively working to publicise the fact and is going out of its way to woo financiers.

Gone are the days when airlines had financial institutions beating a path to their doors trying to get in on aircraft deals.

With the the US sub-prime crisis still taking its toll, financial institutions are continuing to announce write-downs and are out in the market trying to attract funding to prop up their own cash reserves.

If the financial institutions are out pounding the pavement with cap in hand to meet their own needs, its less likely that these same financial institutions will be in the mood to lend millions to others.

The fact that several airlines in the USA have gone into bankruptcy in recent weeks also doesn't whet their appetite for lending.

Lets hope Tiger can beat the bear market.

Yao yapping on

The take-over of Philippine carrier Seair has taken a new twist with Filipino Chinese tycoon Alfredo Yao claiming in the news media that he has bought the airline when in fact he hasn't.
A report in The Manila Bulletin quoted Yao as saying that he has bought the airline and will be merging it with his other airline Asian Spirit and rebranding the business.
He told the newspaper he paid "less than two billion Philippine pesos" ($48 million) for the two airlines.
Yao last month bought Asian Spirit but he has yet to buy Seair.
I know this because I asked Seair director, Nick Gitsis, yesterday whether the airline has been sold and Gitsis said “not yet”.
He says Seair is in negotiations to sell to Yao and some things have been agreed to verbally but Seair has yet to receive a written offer from Yao and “there are still a lot of things that are not clear”.
Gitsis says the carrier anticipates it will receive a written offer on Monday 28 April.
Yao is buying into the small airlines at a time when these two carriers face new competition in the domestic market from larger airlines Cebu Pacific Air and Philippine Airlines which have just started to add turboprops.
Yao is a Philippine businessman who made a fortune from his Zesto fruit juice business plus he has the rights to the RC Cola brand in the Philippines.
Lets just hope Yao's bid for Seair doesn't fizzle out by Monday.

Could PAL's props topple its smaller competitors?

Lucio Tan's new turboprop operation in the Philippines PAL Express is wasting no time in its all out assault on Seair and Asian Spirit's market share in the Philippine domestic market.

Air Philippines, another of Tan's airlines, is in the process of transferring its turboprop aircraft to PAL Express which is due to start on 5 May with three Bombardier Dash 8 Q300s. Tan is one of the Philippines' wealthiest businessmen.

I know this because earlier today I did an interview with Air Philippines CEO Edilberto Medina.

Philippine Airlines - another one of Tan's airlines - has also just bought six second-hand Bombardier Dash 8 Q400s for PAL Express. These Q400s were previously with Scandinavian Airlines group.

Rather than slowly phase in the Q400s - say maybe one every three months - PAL Express is going to be adding one every couple of weeks.

Medina told me today that the first Q400 will arrive in the Philippines on 5 May and will enter into commercial service on 19 May.

He says the dates for entry into service for the other five Q400s are: 26 May, 23 June, 21 July, 26 July and 22 August.

These aircraft will be used on short-haul domestic routes - a market that had previously been left to independent carriers Asian Spirit and Seair.

Asian Spirit - realising the imminent tsunami of competition it was about to face - sold out a few weeks ago to Alfredo Yao, a Philippine Chinese businessman who made his fortune from soft drinks.

Asian Spirit COO, Joaquin Po, tells me Yao has promised to get newer aircraft for the airline to help drive the business forward.

Seair is also looking to sell out - possibly to Yao as well - but is only willing to sell if it is the right price.

One problem Seair and Asian Spirit face is that each operates older aircraft. Asian Spirit has mostly de Havilland Canada Dash 7s and BAe 146s; while Seair operates Let 410s and Dornier 328s.

Plight of Marshall Islands Air has grim consequences

The Marshall Islands is a small nation in the North Pacific that has been in the unenviable position of having no domestic air services for six months.
There have been local reports that the lack of domestic air services has meant some sick people on the islands were unable to be air lifted to hospital and later died.
This is a tragic situation that should have never been allowed to occur.
The country's only airline - national carrier Air Marshall Islands - has three aircraft, namely a Bombardier Dash 8 and two Dornier 228s.
But all three have been grounded due to corrosion damage.
Air Marshall Islands was originally planning to get he Dash 8 back in the air last November.
The carrier's route manager Tony Phillips told me today there was a delay in getting the aircraft fixed and the delay was caused by a lack of funding.
Fortunately the airline's Dash 8 will be back in commercial service on 23 April onwards thanks to a $1.6 million grant from Taiwan.
Some of the money was used to replace the Dash 8's landing gear and the airline now plans to send one Dornier 228 to Germany for repair, he says.
The other Dornier 228 cannot be fixed, says Phillips, adding that the airline is in the market to buy another 228.
It is fortunate that Taiwan's efforts to win friends in the Pacific has inadvertently helped to save lives in the Marshall Islands but it is sad that this small island nation appears to lack the resources to maintain its airline.

Fokker 100 operators to head Down Under

Airlines in Asia Pacific that operate Fokker 100 aircraft will soon have to make the long trek down to Melbourne, Australia if they are to put their pilots through simulator training.
Alteon Training in Singapore has the only Fokker 100 simulator in Asia-Pacific and has just sold it to the Ansett Flight Simulator Centre in Melbourne.
The last day it will be avaliable in Singapore is 5 May, says Alteon Training Singapore director of sales and marketing Chris Bunning.
He says the reason the Fokker 100 simulator is being sold is to make room because later this year Alteon Training Singapore will be adding a Boeing 787 simulator.
But whether there is demand this year for 787 simulator training is highly unlikely considering the first 787 is only due to be delivered late next year.
Its also surprising that Alteon Training has no room in its Singapore centre to house both the 787 and Fokker 100 simulator considering the centre was only built a couple of years ago and it always knew it would be adding 787 simulators later on.
Having the Fokker 100 simulator relocated to Melbourne, supposedly hasn't gone down too well with some of the Fokker 100 operators in the region.
Mandarin Airlines in Taiwan, for example, is understood to be one of the carriers that is not too pleased about having to travel so far for simulator training.
This week I spoke to Kostar Airlines - a new airline in South Korea that plans to launch in August using Fokker 100s - and they told me they were looking to send their pilots to the US or Europe for simulator training rather than travelling Down Under.
The other Fokker 100 operators in Asia Pacific are: Air Niugini (Papua New Guinea), Air Bagan (Myanmar), Aero Mongolia, Alliance Air (Australia), Cosmic Air (Nepal), Mandarin Airlines (Taiwan), Merpati Nusantara (Indonesia), Skywest Airlines (Australia) and Transwisata Prima Aviation (Indonesia).
Another new airline in South Korea called Yeongnam Air and a carrier in Western Australia called Network Aviation Australia also plan to operate Fokker 100s.

South Korea to become crowded airline market

South Korea suddenly looks set to become a very crowded market due to a plethora of new start-ups.

Korean Air and Asiana have traditionally controlled the market and then there are two much smaller carriers - Han Sung Airlines and Jeju Air - which each operate turboprops.

But Singapore's Tiger Airways plans to launch a low-cost carrier called Tiger Incheon in joint venture partnership with the Incheon Municipal Government.

It will start with five Airbus A320s and be based at Seoul Incheon International Airport.

Not to be out done, Korean Air announced last November it plans to launch a low-cost carrier in May called Air Korea.

And earlier this year there was an announcement that Asiana Airlines will have a 46% stake in and will manage Busan International Air, a new airline that plans to launch later this year and is to be based in South Korea's port city of Busan.

And there are also two other start-ups - Yeongnam Air and Kostar Airlines - which both plan to launch this year and use Fokker 100s.

All of these new airlines will be restricted to operating in South Korea's domestic market because the government last November announced that all new airlines will have to wait two years before being permitted to operate internationally.

This means they will be up against South Korea's high-speed trains.

South Korea's new rules are also a major blow to Tiger which had hoped to launch services from South Korea to China and Japan.