Tiger to face a tough market in Indonesia, says analyst

The airline’s progress in Indonesia is viewed positively but described as “just the start of an uphill battle”.

DMG Research said, “We view progress made in Indonesia positively although this is just the start of an uphill battle. Regulatory approvals will need to be secured after which Tiger will be facing a tough market. Nevertheless, our concerns of overcapacity and the probability of aircraft deferment will be eased."

The budget carrier, noted DMG Research, plans to increase its fleet in Singapore from 14 to 20 while maintaining its fleet in Australia at eight. Meanwhile it has two aircrafts leased to Philippines SEAIR. "It plans to end FY12 with 35 aircrafts hence we believe its plans to allocate its five additional A320s to Indonesia," said DMG Research.

Tiger Airways, which has signed a share subscription agreement for its proposed 33% stake in PT Mandala Airlines of Indonesia, will likely have to wait for three months to gain regulatory approvals so flight operations can commence.