SpiceJet shares soared 12% at the BSE during the intra-day trade on Monday to finally close up 7.64% as the airline announced a tie-up with Singapores Tigerair that fuelled speculation of a possible stake sale. Low-cost carrier SpiceJet signed a three-year interline agreement with budget airline Tigerair for greater connectivity between flights operated by the carriers.
This tie-up gives us access to many more passengers. Someone coming to Indian cities from Singapore can use SpiceJet for onward connections on a single ticket, and similarly those flying out to Singapore from smaller cities can buy a single ticket, Sun Group CFO SL Narayanan said. Sun Group is the promoter of SpiceJet.
The aim is to boost tourism and business travel by connecting 14 Indian cities like Ahmedabad, Chennai, Kolkata, Delhi, Goa, Indore, Mangalore, Pune and Bengaluru to Singapore via Hyderabad starting January 6, 2014. The introductory promotional fare will start from R4,699 one way and return starting from R9,998.
Similar to a code-share agreement where both airlines flight numbers are mentioned, in an inter-line ticket only the operating airlines flight numbers are used. An inter-line agreement is a tie-up to issue and accept tickets for flights operated by the partner airlines.
Tigerair Group CCO Alexander Knigge said, India is one of our key markets and we are excited to expand our footprint there through this interline partnership with SpiceJet. We look forward to build a win-win partnership and delivering even more travel options to our customers.
An analyst with a brokerage said, SpiceJet has significant accumulated losses, so such tie-ups may help it bounce back. The market expects an equity sale could be on the anvil. While SpiceJet shares at the BSE went up 12% during the day, they closed up 7.64% at R16.90 on Monday.
SpiceJet, which is currently focusing on increasing presence in tier II and III cities, operates more than 360 daily flights to over 55 airports (45
Indian and 10 international destinations) and has a 20%
of market share in Indian domestic market. Tigerair comprises four airlines, namely
Tigerair Singapore, Tigerair Mandala, Tigerair Philippines and Tigerair Australia and collectively extends to over 50 destinations across 13 countries in the Asia Pacific.