22 / 100
though the barriers to entry are low as
it was not deemed profitable in general.
On the Singapore-Cebu route where
both airlines account for a significant
market share, industr y feedback
indicated that a new entrant in the
next 12 months was unlikely.
In view of the competition concerns on
the Singapore – Clark and the Singapore
– Cebu routes, CCS concluded that the
strategic alliance would not satisfy the
requirements in order to benefit from
the Net Economic Benefit exclusion.
To address the competition concerns,
the two airlines made some revisions
to their alliance. Specifically, to not
coordinate on any commercial activities
such as pricing, surcharges and
capacity, and to not undertake any form
of revenue sharing on the Singapore-
Clark and Singapore-Cebu routes.
The air l ines will , ins tead , jus t
coordinate on the minimum and
maximum connecting times in their
booking systems to create joint
interline itineraries, where passengers
need to travel on multiple airlines as
part of their itineraries. The scheduling
of flights will be done independently.
This means that the passengers
could possibly benefit from improved
connectivity without the fares being
coordinated by the airlines.
REVISED STRATEGIC
ALLIANCE BETWEEN CEBU
PACIFIC AND TIGERAIR
SINGAPORE CLEARED FOR
TAKE-OFF
TRANSPORT
| NOTIFICATION
Case Team Members:
Yeo Hui Chuan
Edmund Lam
Jayme Leong
Ng Ming Jie
Lynette Chua
Ng Ee Kia
On 21 September 2015, Cebu Air,
Inc . (“Cebu Paci f ic” ) and T iger
Airways Singapore Pte Ltd. (“Tigerair
Singapore”) received the green light
for a strategic alliance between them
on common flight routes between
Singapore and the Philippines, following
some changes made. The two airlines
operate common routes between
Singapore and Manila, Singapore and
Clark, and Singapore and Cebu.
As the strategic alliance involves
coordination on pricing, capacity and
revenue sharing between the two
airlines, CCS had considered that the
strategic alliance would by its nature
prevent, restrict or distort competition
on the overlapping common routes.
As both air lines were the only
competitors operating the Singapore-
Clark route, the alliance would eliminate
competition on this route. Based on
industry feedback, it was unlikely for
other airlines to commence operation
on this route in the near future even
1. A g r e em e n t s w i t h
net economic benefit
enjoy exclusion only
from the section 34
prohibition of the
Competition Act. Such
agreements are those
that improve production
or distribution, or
promote technical or
economic progress, and
in which restrictions are
absolutely necessary to
achieving these benefits
and do not substantially
eliminate competition.
CCS had considered
t ha t t h e s t r a t e g i c
all iance would by its
nature prevent, restrict
or distort competition
on t he over l app i ng
common routes.
20
GUIDING YOU TO NEW HEIGHTS
CCS ANNUAL REPORT 2015-2016