The Australian Competition and Consumer Commission has approved Virgin Australia's 60 per cent takeover or Singapore Airlines' low-cost carrier Tiger Airways Australia.
The $35million acquisition will allow it to compete with Qantas' budget airline Jetstar, after Virgin abandoned the segment by moving upmarket to capture more high yielding business travellers.
Only recently, Virgin Australia completed its purchase of regional airline SkyWest.
Now only a small handful of final approvals are needed, including the Foreign Investment Review Board, to see its tie up with Tiger proceed.
Once through, Virgin will compete with Qantas at all levels; regionally its SkyWest acquisition will take on Qantas Link; domestically in the budget space its Tiger brand will compete with Jetstar; domestically in the premium market Virgin Australia is trying to muster in on Qantas' territory (Qantas currently holds a 65 per cent domestic market share); and in the international space, Virgin Australia already flies to the United States and the Middle East, the latter of which Qantas is now paying closer attention to thanks to its strategic alliance with Emirates.
In its decision , the ACCC said that in its view, the acquisition is unlikely to lead to a substantial lessening of competition in the Australian aviation market.
In fact, it may have benefitted given claims, Tiger was set to exit the Australian market, after it lost around $67million over the past two years.
But Tiger Airways Australia has had a chequered past, despite recent moves to assure customers of a change in business practises.
Air safety regulators grounded the airline for five weeks in 2011 due to safety concerns and one would argue its portrayal in the Channel 7 reality program "Air Ways" may have hurt its reputation.
The program took a warts and all look at the day to day operations of the company, disgruntled passengers included. Even though the program was recorded in 2010, before a shake-up of the company after its grounding, the final episode was only broadcast late last year.
That saw Tiger address the problem last September by tweeting "The footage was filmed over 2 years ago so isn't reflective of re-launched Tiger" and "In order to be popular the show airs a disproportionate amount of 'drama' for viewers".
At the moment, Tiger has 11 domestic planes, but that's likely to expand with both Tiger and Virgin committing around $62.5million into the business.
Virgin previously said it will retain the Tiger brand.
But it will be interesting to see whether consumers will embrace the company, how Virgin will position it, and whether management will ultimately rebrand its discount carrier if the Tiger brand doesn't resonate with travellers.
