Singapore Airlines (SIA) and Tiger Airways (Tigerair) announced last evening that Scoot and Tigerair have already seen a doubling of passengers connecting between the two airlines since the anti-immunity trust was granted in Aug-14. This is the result of more competitive airfares, co-ordinated joint promotions and launch of new itineraries only available through the coordination of routes between these two airlines.

While the data is encouraging, we note that in Aug-14, the two airlines were offering a total of more than 450 weekly flights and as at Nov-14, the connecting traffic between them was still only less than 5%. The base figure of connecting flights between these two airlines was small to begin with.

That being said, we still think this is a huge step for the alliance and is certainly positive for Tigerair to execute its turnaround strategy. However, we believe the earliest we can see material impact from the alliance could be until at least 2HFY16 onwards. Hence, maintain SELL with an unchanged FV estimate of S$0.18.

Source: OCBC Research - 15 Jan 2015