Tigerair Mandala to cease operating

Tiger Airways’ Indonesian subsidiary, Tigerair Mandala, will cease operating from 1 July 2014.

The loss-making low-cost carrier has been forced to ground multiple flights this year, and Tiger, along with the airline’s other major shareholder, Saratoga Group, said they have decided to cease funding the airline. As a result, Tigerair Mandala will now ground all flights as of the end of this month.

“Mandala’s financial results reflect the challenges that it is facing in the difficult operating environment,” said Lee Lik Hsin, group CEO of Tigerair. “The partners in Mandala have jointly come to the conclusion to cease funding the airline’s operations. Nevertheless, Indonesia remains an important market for us, and we will continue to maintain an active presence through Tigerair Singapore.”

Tiger acquired a 33.0% stake in the former Mandala Airlines in January 2012, and restructured the struggling airline under its low-cost model. It then increased its stake in the carrier to 35.8% in September 2013. But the airline has continued to struggle in the face of stiff competition from the likes of Garuda Indonesia, Citilink, Lion Air and AirAsia.

Tiger said the decision to pull out of Mandala will allow it to focus on implementing its turnaround strategy, which includes “fleet consolidation, strategic alliances and an asset-light growth model”. The group also recently sold its stake in Tigerair Philippines to Cebu Pacific, while Virgin Australia has taken a major stake in Tigerair Australia. This leaves Tiger with its main Singapore-based low-cost carrier, although it is also in the process of creating Tigerair Taiwan in partnership with China Airlines.

Tigerair Mandala’s last flight will depart Hong Kong for Bali on 1 July 2014. All other flights from this date will be cancelled. Tiger said it will provide affected passengers with alternative flights or refunds.