Tiger Airways Australia

Tiger Airways Australia Pty Ltd, operating as Tiger Airways Australia, is an ultra-low cost airline which commenced services in the Australian domestic airline market on 23 November 2007. It is a subsidiary of Tiger Airways Holdings, a Singapore-based company, which is owned partially by Singapore Airlines. The airline is based in Melbourne, Victoria, with its main base at Melbourne Airport. The airline's secondary base, Adelaide Airport, commenced operations on 1 March 2009. A smaller "virtual base" was opened in Sydney on 29 October 2009.Tiger also opened a third operational base at Melbourne's Avalon Airport, in November 2010.

History

Australian government policy and legislation currently permits airlines that are 100% foreign-owned to operate domestic airline services within the country. The change in regulations originally applied only to New Zealand-owned airlines in 1996, but were later relaxed, resulting in the establishment of Virgin Australia. Australian international airlines are still subject to ownership rules limiting foreign ownership to 49%.

The Australian Foreign Investment Review Board gave approval for Tiger Airways to establish its wholly owned Australian subsidiary in March 2007 and did not place any special conditions on its approval.Subsequently on 16 March 2007, Tiger Airways Australia Pty. Ltd. was incorporated in the Northern Territory, although the company itself is based in Melbourne, with Melbourne Airport being the airline's major hub. A$10 million and five aircraft were committed to start the subsidiary. The airline's business model is based on that of sister airline Tiger Airways, which attempts to increase the total market size (number of passengers), control operating costs of the airline, and maximise the number of sectors served by its aircraft. One way it planned to keep costs low was by avoiding expensive airports.

Tiger undertook the final stage of Australian regulatory procedures on 20 November 2007, performing two proving flights from Melbourne, to the Sunshine Coast and Launceston respectively. Each carried officials from the Civil Aviation Safety Authority as well as Tiger crew. Tiger successfully completed these flights, and received their Air Operator's Certificate on Thursday 22 November, becoming one of only two Australian airlines to earn the certificate on their first attempt, following OzJet.

The aircraft used by Tiger Airways Australia have the same livery as their Singapore sister company. The airline projected initial traffic of 2 million passengers annually.

Tiger Airways Australia's first scheduled flight was TT 7402, departing Melbourne for the Gold Coast, on 23 November 2007 at 7:30am. The first flight to Mackay took off just minutes later.

On 31 May 2008, it was announced that passengers would now be charged a fee for check-in luggage. It is a A$10 (for 15KG) fee at booking but if paid at check-in, it increases to A$20.

It was announced on 3 April 2009 that Tiger intended to launch into the Melbourne-Sydney market, the third busiest passenger route in the world, signalling an end to its operational policy of avoiding expensive airports.

On 18 July the same year, it was announced that Tiger would be increasing its Melbourne-Sydney flights by up to nine flights a day in each direction, and doubling the capacity on the Adelaide-Sydney Route. This is all part of expansion plans arising from new aircraft arriving from 4 October 2009.

On 5 November 2009 Tiger Airways announced the intention to launch into the Brisbane market with services to Melbourne, Adelaide and Rockhampton. Tiger celebrated these routes for A$2 during their Second Birthday sale, along with all Tasmanian routes, and the popular Melbourne to Sydney route.

Tiger Australia announced in February 2010 that the airline is now profitable. On 27 March 2010 Tiger Airways announced it would return to the Melbourne-Darwin route, with six flights weekly from 18 June. 1 June 2010 marked the departure of former MD Shelley Roberts, and the arrival of her successor Crawford Rix. "As far as I am concerned, on-time performance is going to be a big area that we will be focusing on," said Rix in a media interview.

On 1 July 2010, Tiger became the second airline in the world apart from Irish shareholder Ryanair, to introduce a fee to check in. The A$10 fee applies to those passengers who don't opt for the web check-in service. By October 2010, the charge has since risen to A$20.

On 16 July 2010, Tiger Airways announced its intentions to cease all flying from Launceston Airport as of 2 August 2010. The Adelaide-Hobart route is also to be suspended. Communications manager Vanessa Regan says the cuts are due to seasonal demand.

On 16 September 2010, Tiger commenced services to Cairns, operating a late night daily service from its Tullamarine base.

On 21 October 2010, Tiger announced that it was adding two Airbus A320 aircraft to the Melbourne base in the new year, bringing its Victorian fleet to a total of ten aircraft, in line with the deal struck with the State government.

Competitors' reactions

The arrival of Tiger Airways Australia in the market resulted in varied responses from its primary competitors, mainly Qantas (and its subsidiary Jetstar Airways) and Virgin Australia. Jetstar, in particular, has been particularly vocal, with its chief executive Alan Joyce quoted as saying "Tiger and what they have done have come across as a joke, and will probably continue that way". He further claimed that Tiger was losing over SGD$60 million over the past two years of operations out of Singapore.

Air fares began to drop, as special offers and other promotions were launched, such as Jetstar's announcement that it will "double the difference of any competitor's fare that is cheaper than its own fares". This was soon followed by a bonus system to entice its customers to stay with the airline. Jetstar immediately matched Tiger's Melbourne to Darwin fare upon announcement.

Tiger Airways Australia had previously been quoted as planning to offer "single digit" one-way fares when it began service. The announcement of AU$79.99 flights from Melbourne to Darwin was met with criticism from Jetstar.

When Tiger released its first route, Melbourne — Darwin, at a price of AU$79.99, Jetstar immediately undercut the price, offering sale fares at AU$79 on the same route over the same period. Similarly, when Tiger released its second route, Melbourne — Gold Coast, at a price of AU$49.95, Jetstar again undercut the price, offering AU$39 fares on the route over the same period. In response to Tiger's announcement of Melbourne — Launceston flights, priced at AU$39.95, Jetstar offered AU$29 flights over the same period, save a holiday blackout.

Virgin Australia, however, has yet to respond to Tiger in any significant way. Virgin Australia considered the possibility of establishing a low-cost offshoot to fend off Tiger Airways, but instead decided to focus the funds on its new trans-Pacific carrier V Australia and on increasing their business travel share by introducing a Premium Economy service.

Melbourne Airport announced plans to cut usage fees soon after Tiger's announcement of a hub there, in a bid to increase its share of low-cost traffic Tiger's mention of New Zealand as a potential market has also raised concerns in that country.

Just days before the launch of Tiger Airways Australia, Jetstar offered 5,000 seats on 21 November 2007 for the price of five cents, inclusive of taxes, on seven domestic routes, costing the airline $25.00 per seat. Jetstar claims that the sale has nothing to do with the Tiger launch, while at the same time referring to them as "competitive". The airline's spokesman, Simon Westaway, was quoted as saying that they "are a good airline in their own right. We are not going head to head. We respect them for the competitor that they are going to be".

On 23 November 2007, the airline publicly slammed Qantas for being unable to provide ground handling services to the airline at Alice Springs, forcing it to delay its launch to the city by three months to 1 March 2008. The airline had promised to pay any cost to Qantas, but services were still denied. Qantas executive general manager John Borghetti responded by saying "assisting competitors is not part of my job description".Tiger Airways Australia CEO, Tony Davis reminded Qantas that Tiger's parent, Singapore Airlines, provides ground servicing at Singapore Changi Airport for both Qantas and Jetstar, and it wasn't unreasonable for Qantas to provide Tiger the ground staff at Alice Springs Airport.