Singapore Airlines ups pressure on Qantas with Virgin Australia deal

The move by Singapore Airlines, the world's second-largest carrier by market value, marks both a step to preserve its dominant position in the Asia-Pacific premium air travel market and an effort to deal with its troubled budget associate, Tiger Airways Holdings Ltd.

As part of a series of deals revealed on Tuesday, Virgin, Australia's No.2 carrier, will buy 60 per cent of Tiger Australia for A$35 million and invest a further A$62.5 million to increase the fleet size to 35 aircraft from 11 by 2018.

City Index analyst Peter Esho said Qantas's ambition to become a premium player in the Asia-Pacific aviation market was meeting stiff resistance from Singapore Airlines.

We see today's move by Singapore Airlines as a strategic shift down south to back Qantas's main domestic competitor, he said.

Virgin is also buying regional and charter carrier Skywest , which services fly-in fly-out mining camps, in a deal worth A$93 million.

Virgin shares rose as much as 6.5 per cent to A$0.49 and shares in Skywest surged 53 per cent to A$0.43. Qantas shares were flat, while Singapore Airlines rose 0.4 per cent.

Shares in Tiger Airways, 33 per cent owned by Singapore Airlines, were suspended after the carrier reported a S$18 million second-quarter net loss.

Partner up

Virgin's efforts to shore up its position follow Qantas's proposed 10-year alliance with Dubai's Emirates,

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