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Star Cruises acquires stake in Valuair

Search ASIA Travel Tips .com 21 December 2004

Valuair has received a major boost to its second round of capital raising, with the signing of a strategic alliance with Star Cruises - the world’s third-largest cruise operator. Star Cruises is acquiring approximately 20% of Valuair for a reported USD10 million.

The funds will enable the Singapore-based budget airline to continue to expand its network, which currently includes Bangkok and Hong Kong (twice daily), Jakarta and Perth (daily). The airline is also planning to operate beyond a five-hour flying time radius of Singapore, and may require a fleet of long-haul aircraft, breaking away from the stereotypical low cost operating model.

According to the Centre for Asia Pacific Aviation's Managing Director, Peter Harbison, “the move helps differentiate Valuair from its low cost competitors and opens up a potentially valuable new distribution channel for the airline”. Valuair will now offer fly-cruise packages with Star Cruises, which caters for 130,000 inbound tourists annually from India, Australia, China, Indonesia, Malaysia, Japan and the UK.

“It does potentially increase Valuair’s exposure to the cycles of the cruise industry and could make it captive to strategic aims of its now third largest shareholder. So maintaining strategic independence from Star Cruises will be a challenge for both companies”, said Mr Harbison.

According to Star Cruises, the alliance is part of a strategy to develop Singapore into a world-renowned cruise hub rivalling Miami.

Miami-based Carnival Cruise Lines was an early pioneer of the Fly-Cruise model. Carnival purchased Pacific Interstate Airlines in 1998 and renamed it Carnival Airlines the following year. Carnival Airlines mainly operated charter services to several Caribbean destinations, including San Juan and Aguadilla. However, the carrier, which was primarily operated by Carnival Cruises to feed its cruise network, shut down in the late 1990s, due to low passenger loads and rising competition, particularly from low cost carriers.

“Carnival serves as a warning to Star Cruises and Valuair to maintain two separate bottom lines. But the burgeoning intra-regional tourism markets offer some very interesting potential synergies. It will take some time before the aviation system opens up enough to allow Valuair to extend its network around the region. This move provides the airline with a useful range of new options”, said Mr Harbison.

Valuair CEO, Sim Kay Wee, will address the Second Annual Asia Pacific Low Cost Airline Symposium 2005 in Singapore on 26/27 January. The event will include one of the most prestigious gatherings of Low Cost Airline CEOs ever assembled in the Asia Pacific region:

* Air Deccan: GR Gopinath, Managing Director
* Tiger Airways: Tony Davis, CEO
* Virgin Blue: Brett Godfrey, CEO
* Nok Air: Patee Sarasin, CEO
* Jetstar Asia: Con Korfiatis, COO
* Orient Thai/One-Two-Go: Udom Tantiprasongchai, Chairman
* Valuair: Sim Kay Wee, CEO

The programme in Singapore will also feature presentations from:

* Bill Franke, Managing Director, Indigo Partners
* European Low Fare Airlines Association: Jan Skeels, Secretary General
* Accor Asia Pacific: Brian Deeson, Senior VP Development
* Flight Centre: Paul Scurrah, Executive General Manager Strategy
* Macau Airport: Chan Wai Leong, Executive Director
* Malaysia Airports: Dato’ Bashir Ahmad, Managing Director
* Matsushita: David Bruner, Director Strategic Product Marketing
* Virgin USA: Charles Ogilvie, Director Inflight Entertainment

See other recent news from: Valuair

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