Tiger Airways faces suspension threat in Australia

The airline’s fate remains to be seen after it was served with a “show cause” notice by the Civil Aviation Safety Authority.

The notice, issued on March 23, asked Tiger Australia to clarify on certain matters. The company declined to offer details when approached by the media.

Tiger Australia responded in an SGX announcement that the company continues to operate normally and in accordance with Australian regulators and with CASA’s approval.

CASA, which advised that they do not comment publicly on the regulatory actions until confirmation, also advised that any airline served with a show cause notice may continue to operate normally pending the outcome.

The regulator, however, warned it would suspend the airline’s operations immediately if there is a serious and imminent risk to air safety.

In a statement, Phillip Securities Research said a regulatory action such as suspensions would have a "significant impact" on the Tiger Airways, whose domestic operations in Australia accounts for half of its revenue.

"We believe that concerns over Tiger Airway’s ability to continue its operations in Australia could result in weak near term sentiments on the stock. Furthermore, safety concerns could hurt consumer confidence in the airline and dampen its ability to grow in scale," the analyst said.

It added, though that there is no cause for alarm yet pending the outcome of the proceedings.