Tiger Airways is contemplating shutting down its loss-making Australian operations if it does not get regulatory approval to sell its controlling stake to Virgin Australia (VA).
BT understands from well-placed sources that the budget carrier is studying such a contingency, following recent ambivalence towards the deal from the Australian competition regulator.
In early January, Australian Competition & Consumer Commission (ACCC) chairman Rod Sims expressed reservations about the planned A$35 million (S$45 million) sale of a 60 per cent stake in Tiger Australia to VA, describing the Virgin-Tiger merger as "complicated".
"On the one hand, if the merger proceeds, Virgin will be in a much better position to take on Jetstar by using Tiger," he said. "On the other hand, it will be taking out the third player in our aviation market to do that, so there's a very complex equation there to weigh up," he had told Australia's ABC News.
All this comes just months after the late October surprise announcement by Singapore Airlines (which owns a third of Tiger) that it will spend A$105 million (S$133 million) for 245.57 million shares or 10 per cent of Australia's second- largest carrier.
VA would, in turn, pay about A$35 million for 60 per cent control of Tiger Australia and a further A$99 million (S$127 million) for Perth- based regional carrier Skywest.
These moves were announced just months after troubled domestic giant Qantas unveiled plans for an alliance with Dubai- based Emirates.
The Australian Foreign Investment Review Board has already given approval to the SIA-VA deal, while Australian regulators have also given the nod to the Qantas-Emirates tie-up for five years.
For all intents and purposes, these mergers and alliances (which require regulatory approval in both Australia and Singapore) would result in a consolidation of the Australian domestic aviation market - lining up Qantas/Jetstar/Emirates on one side against VA/Tiger/Skywest/SIA on the other.
Analysts reckon the deal would carve up the Australian market with VA controlling about 34 per cent, and the Qantas group the balance.