Tiger Singapore catches a capacity breather: DBS

The local arm of the airlines may soon improve its loads as new aircraft is allocated to the bustling Australia operations.

Tiger Airways Australia, a Singapore Airlines subsidiary, is particularly on the up-and-up. It has a new planned base in Sydney and recent go-signal to expand coverage to 64 sectors per day by late this year.

All considered, the growing operations out of Australia could help prevent the Singapore arm from taking on unneeded capacity.

Here's more from DBS:

Tiger Airways Australia announced today that it would be establishing a second Australian base in Sydney, with operations to commence from July. From 1 July 2012 onwards, three A320s will progressively be based out of Sydney and provide up to 10 daily return services through Sydney Airport. Tiger Australia CEO Andrew David said that this is indicative of a new era as it has now received the green light from CASA, Australia's aviation industry regulator, to progress with its 2012 business plan to have 10 aircraft operating in Australia by end-2012. Two new routes will be introduced initially: Sydney-Gold Coast and Sydney-Brisbane, with 4 daily return services on each route. Frequencies on the popular Sydney-Melbourne route will also be ramped up to 11x daily from 9x daily currently.

This follows on the heels of CASA’s decision to grant approval to Tiger Australia to operate a maximum of 64 sectors per day from October 2012, up from the current limit of 38 sectors per day and at par with its operations before the suspension last year. The sector limits will be implemented progressively from July to October, and paved the way for Tiger Australia’s second base in Sydney.

This is positive news for Tiger Airways, as it strives to turn its operations around and restore its Australia operations to pre-grounding scale. In fact, management also indicated that an 11th aircraft would be added to the Melbourne base (total number of aircraft based out of Melbourne rising to 8) by August 2012 – further signaling improving fleet deployment options. Beyond the immediate term, there are plenty of growth opportunities for Tiger Airways in Australia such as potentially another base in Brisbane (where Air Australia recently exited). With the setting up of a second base in Australia and Indonesian associate Mandala Airlines potentially coming online by April 2012, we do not expect Tiger Singapore to need to absorb any new aircraft in FY13 (in fact 2 aircraft on its books will be deployed to Mandala), which will give it time to digest the significant capacity added in FY12 and improve loads.

Hence, we believe that Tiger Airways is well on track to turn around by end CY-2012 (3Q-FY13).