Tiger-Seair deal stopped

Manila Standard Today
May 20, 2011
by Jeremiah F. de Guzman

The Civil Aeronautics Board issued a provisional order stopping Tiger Airways Holdings Ltd. of Singapore from implementing a “marketing arrangement” with local carrier South East Asian Airlines for the Manila-to-Cebu and Manila-to-Davao flights using aircraft leased from Tiger.

The order “is based on strong indications of possible violation of the restriction on cabotage,” executive director Carmelo Arcilla said in a mobile phone message Thursday. Tiger in February said it will purchase a 32.5-percent stake in Seair for $6 million.

Seair president Avelino Zapanta said in a phone interview that major airlines were threatened by the aggressive expansion of the smaller carrier.

The CAB in an order dated May 13 directed Seair and Tiger to “enjoin from pursuing and implementing its marketing arrangement for the sale, booking and reservation systems as well as in the print and other media, for the routes Manila-Cebu and Manila-Davao using aircraft leased from Tiger.”

The ruling was in response to the joint complaint filed by Philippine Airlines, Cebu Pacific, Zest Air and Air Philippines, questioning the legality of the lease agreement between Seair and Tiger.

The regulator said the partnership was more than a marketing agreement and gave Tiger control over Seair’s domestic flights.

“[The partnership] is against public interest and constitutes an unfair business practice that must be nipped in the bud,” the CAB said.

Zapanta denied the allegations of the major carriers. “That is something they have been trying to prove in the last five years,” he said.

“We are operating the flights, we are the ones ground-handling and piloting the aircraft. We are in control of all the operations and we are only using Tiger’s booking engine,” Zapanta said.

He said Seair was paying Tiger a certain amount for every passenger who booked and boarded using the Singaporean company’s Web site. Other local carriers practice the same marketing scheme, he said.

Zapanta said despite the order, Seair would continue to use Tiger’s booking engine for international flights, although the agreement included domestic flights.

“That will just be temporary while resolving other issues raised by the carriers,” he said. Eric B. Apolonio, Bloomberg