Out-Law / Your Daily Need-To-Know

Singapore competition chiefs clear airline acquisition

18 Sep 2014, 11:24 am

The Competition Commission of Singapore (CCS) has cleared the acquisition by Cebu Air of Southeast Asian Airlines (SEAir) saying the deal will not lead to a “substantial” reduction of competition on air links between Singapore and Clark International Airport in the Philippines.

The CCS said the Singapore-Clark route was the relevant market affected (2-page / 96 KB PDF) because, prior to the acquisition, Cebu Pacific and SEAir were the only two airlines competing on the route after several other airlines had entered and then withdrawn.

Following the merger there are two competitors on the route, following the re-entry of Tiger Airways Singapore Pte Ltd (Tigerair) in March 2014, the CCS said. “On the basis that Tigerair Singapore and Cebu Pacific have been competing on the Singapore-Clark route, CCS found that the acquisition does not lead to a substantial lessening of competition on this route.”

However, the CCS said it will undertake a separate review of a ‘strategic alliance agreement’ (SSA) between Cebu Pacific and Tigerair Singapore to determine if the SSA is anti-competitive.

The SSA includes joint operation of common routes between Singapore and the Philippines, the joint sale and marketing of common and non-common routes using codeshare or interline arrangements and cooperation in relation to sales and marketing, distribution, airport operations and ground handling, scheduling, pricing, service policies, innovation and procurement. All parties have filed a separate notification for decision pertaining to the SAA, the CCS said.

On 20 March 2014, Tigerair announced the completion of the sale by its wholly-owned subsidiary, Roar Aviation II Pte Ltd of its 40% of the shares in SEAir to Cebu Air. Tigerair said on 15 September (1-page / 64 KB PDF) that the CCS clearance had “no impact on the completion of the SEAir sale as it was not a condition of the sale”.

A market study on the aviation industry commissioned by the CCS (9-page / 512 KB PDF) was published last March. The CCS said the study enabled it to gain “a deeper understanding of the competitive dynamics of the aviation industry in Singapore” in relation to international aviation and “provided key inputs that will help CCS make more informed and speedier assessment of future aviation joint venture agreements”.