Singapore Airlines will soon have a no-frills sibling

The new airline - Tiger Airways - will begin flights in the second half of 2004, to destinations up to four hours' flying time from Singapore.

Singapore Airlines will own 49% of the new venture, with Tony Ryan and family holding a 16% share.

Tiger will enter South East Asia's fast growing no-frills airline sector.

Growing competition

The move is seen as Singapore Airlines' response to growing competition from the budget carriers.

Singapore Airlines chief executive Chew Choon Seng said Tony Ryan had been brought on board because of his experience in the no-frills sector.

The other shareholders are the Singapore Government's investment arm, Temasek Holdings, with 11%, and US private investors Indigo Partners with 24%.

The structure gives Singapore Airlines - itself majority-owned by Temasek - effective majority control.

Unsuccessful

Chew said: "We have observed that almost all attempts by full service network airlines to operate wholly-owned low-fare carriers have been unsuccessful.

"This is because the low-cost model requires completely different methods and procedures, marketing approaches and skills."

Chew added that a Singaporean will be appointed as chief executive.

Mr Ryan said he was delighted to be involved, and was not ruling out taking up a larger share of Tiger in the future.

Opportunity

He said: "We are happy with the investment we have right now. If an opportunity comes up to increase it, I'm sure we'll look at it very seriously."

Mr Ryan added that the partners had agreed that Tiger would remain majority owned by Singaporeans.

Tiger will operate a fleet of single aisle aircraft, although it has not yet decided which model of plane it will fly.

Another new budget airline - ValuAir - is to launch from Singapore in June 2004.

Set up by former Singapore Airlines executives, it has already begun hiring pilots and staff.