SINGAPORE - Singapore Airlines (SIA) has set up a holding company to own and manage its budget airlines Scoot and Tigerair.

Confirming an earlier Straits Times report, SIA said in a statement on Wednesday (May 18) that the new entity - Budget Aviation Holdings - will be helmed by Tigerair's current chief executive Lee Lik Hsin.

Scoot's boss Campbell Wilson will return to the parent carrier.

SIA chief executive Goh Choon Phong will be chairman of Budget Aviation Holdings and its management will include senior staff from Scoot, Tigerair and SIA.

The holding company structure will allow for the integration and sharing of key functions, such as in sales and marketing, information technology, planning and operations.

SIA's statement did not say if staff would be affected by the changes.

Last November, SIA announced its plan to take full control of Tigerair which it then owned about a third of, and eventually take the carrier off the Singapore Exchange.

Mr Goh said in the statement on Wednesday: "We launched our general offer so that we could fully realise commercial and operational synergies between Scoot and Tigerair."

"The holding company structure will drive a deep integration of our low-cost subsidiaries, which are important parts of our portfolio strategy in which we have investments in both the full-service and budget aspects of the airline business," he said.

Mr Lee said: "There are many opportunities ahead for Scoot and Tigerair to work more closely together, which will provide new opportunities for the growth of both airlines for the benefit of our customers."

Industry analysts said the move is positive for the SIA group, which faces intense competition especially in the premium long-haul market.

A full merger eventually with both carriers operating under a single brand is expected but not immediately, they said.