Cebu Pacific, Tigerair JV secures Singaporean antitrust nod
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Cebu Pacific Air (5J, Manila) and Tigerair (TR, Singapore Changi) have secured Singaporean anti-trust regulatory approval for their enhanced joint venture on flights between the Philippines and Singapore.
Under their original agreement filed in September of last year, the two carriers proposed jointly operating common routes between the two countries (Singapore to Manila, Clark, and Cebu in particular) and other markets that may emerge, on a metal-neutral basis. In addition, they intended to jointly sell and market common and non-common routes while cooperating in the area of sales and marketing, distribution, airport operations and ground handling, scheduling, procurement, and pricing among other areas.
The Competition Commission of Singapore (CCS) said in its ruling that an initial assessment of the joint venture had shown it would impinge on competition on the Singapore-Clark and Singapore-Cebu routes where the two are the only operators and the dominant operators respectively. The Singapore-Manila route would not be affected given the presence of what the CCS termed ‘strong carriers’Philippine Airlines (PR, Manila) and Jetstar Asia Airways (3K, Singapore Changi).
Given the CCS’s concerns, the carriers agreed to make various concessions which include reducing the level of cooperation on the Singapore–Clark and the Singapore–Cebu routes to an interline agreement only. In addition, they pledged not to coordinate on any commercial activities, such as pricing, surcharges and capacity, and will not undertake any form of revenue sharing on the Singapore–Clark and the Singapore–Cebu routes.
“The Parties’ coordination will instead be restricted to coordinating minimum and maximum connecting times in their booking systems for the purpose of creating joint interline itineraries. Scheduling of flights on these two routes will also be carried out independently by each Party,” the CCS said.
With these guarantees in place, the CSS said the risk of coordinated fare increases and the possible impediment to the entry by other airlines on these routes to be “sufficiently mitigated.”
Both carriers welcomed the CCS’s decision
Questions & Answers
Q.Which routes initially raised concerns for the Competition Commission of Singapore?
Which routes initially raised concerns for the Competition Commission of Singapore?
The Singapore-Clark and Singapore-Cebu routes initially raised concerns. The Commission found that Cebu Pacific and Tigerair were the only or dominant operators on these routes, which could have negatively impacted competition.
Q.What measures did the airlines agree to for the Singapore-Clark and Singapore-Cebu routes?
What measures did the airlines agree to for the Singapore-Clark and Singapore-Cebu routes?
They agreed to reduce cooperation on these routes to an interline agreement only. They also pledged not to coordinate pricing, surcharges, capacity, or undertake revenue sharing, and will schedule flights independently.
Q.Why was the Singapore-Manila route not considered problematic by the Commission?
Why was the Singapore-Manila route not considered problematic by the Commission?
The Singapore-Manila route was not considered problematic because of the presence of 'strong carriers' like Philippine Airlines and Jetstar Asia Airways. This indicated sufficient competition on that route.
Q.What kind of cooperation is still allowed between the carriers for the affected routes?
What kind of cooperation is still allowed between the carriers for the affected routes?
For the affected routes, cooperation is restricted to coordinating minimum and maximum connecting times in their booking systems. This allows for creating joint interline itineraries without impacting competition.
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