Tiger_Airways_Australia

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Tiger Airways Australia

Tiger Airways Australia Pty Ltd is a low cost airline which commenced services in the Australian domestic airline market on 23 November 2007. It is a subsidiary of Tiger Aviation, a Singapore based company, which is owned in part by Singapore Airlines. The airline is based in Melbourne, Victoria, with its main hub at Melbourne Airport and plans to establish a secondary hub at Adelaide Airport from March 1, 2009.

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 regulation originally applied only to New Zealand owned airlines in 1996, but were later relaxed, resulting in the establishment of Virgin Blue. Australian international airlines are still subject to ownership rules limiting foreign ownership to 49%.

The Australian Foreign Investment Review Board approved the airline to establish its wholly-owned Australian subsidiary in March, 2007 and did not place any special conditions on its approval. Subsequently, on Friday, 16 March 2007, Tiger Airways Australia Pty Limited was incorporated in the Northern Territory, although the company itself is based in Melbourne, with Melbourne Airport being the airline's major hub. AUD$10 million and 5 aircraft have been 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. It will keep cost low by avoiding expensive airports.

Tiger undertook the final stage of Australian regulatory procedures on November 20, 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 November 22, becoming one of only two Australian airlines to earn the certificate on their first attempt, following charter airline OzJet. Tiger's first flight took off from Melbourne Airport on November 23 at 07:18.

The aircraft used by Tiger Airways Australia has the same livery as their Singapore sister company. The airline projects traffic of 2 million passengers annually initially.

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

On May 31, 2008, it was announced that passengers would now be charged a fee for check-in luggage. It is a A$5 fee at booking but if paid at check-in, it increases to A$20.

Ownership

Tiger Airways Australia is wholly owned by holding company Tiger Aviation, which itself is owned by:

Singapore Airlines Limited (49%)
Indigo Partners LLC, the investment firm founded by Bill Franke (24%)
Irelandia Investments Limited, the private investment arm of Tony Ryan (of Ryanair) and his family (16%)
Temasek Holdings Pte Ltd (11%)

Shares of Tiger Airways Australia Pty Ltd are not publicly traded.

Destinations

From Melbourne (Melbourne Airport) to:

Adelaide (Adelaide Airport)
Alice Springs (Alice Springs Airport)
Canberra (Canberra International Airport)
Darwin (Darwin International Airport) [ends October 25]
Gold Coast (Gold Coast Airport)
Hobart (Hobart International Airport)
Launceston (Launceston Airport)
Mackay (Mackay Airport)
Perth (Perth Airport)
Rockhampton (Rockhampton Airport)
Sunshine Coast (Sunshine Coast Airport)

From Adelaide (Adelaide Airport) to:

Alice Springs (Alice Springs Airport) [begins March 1]
Gold Coast (Gold Coast Airport) [begins March 1]
Hobart (Hobart International Airport) [begins March 1]
Melbourne (Melbourne Airport)
Perth (Perth Airport) [begins March 1]

Competitors' reactions

The impending arrival of Tiger Airways Australia in the market has resulted in varied responses from its primary competitors, mainly Qantas (and its subsidiary Jetstar Airways) and Virgin Blue. 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 begins service. The announcement of AUD$79.99 flights from Melbourne to Darwin was met with criticism from Jetstar.

When Tiger released their first route, Melbourne — Darwin, at a price of AUD$79.99, Jetstar immediately undercut the price, offering sale fares at AUD$79 on the same route over the same period. Similarly, when Tiger released their second route, Melbourne — Gold Coast, at a price of AUD$49.95, Jetstar again undercut the price, offering AUD$39 fares on the route over the same period. Most recently, on July 8, Jetstar offered 10,000 fares on selected routes for AUD$1. In response to Tiger's announcement of Melbourne — Launceston flights, priced at AUD$39.95, Jetstar offered AUD$29 flights over the same period, save a holiday blackout. On October 29 Tiger announced $9.95 one way fares to 75% of its destinations , in which Jetstar responded only with $9 to 3 similar routes, with very heavy blackouts.

Virgin Blue, however, has yet to respond to Tiger in any significant way.

All three Australian incumbents have since announced new flights or increased capacity on existing ones. Jetstar announced new Sydney-Brisbane flights to commence in December, and increased flights to the Gold CoastThey have also announced the purchase of Airbus A321 aircraft which will be used to increase capacity on key Queensland routes where Jetstar are being challenged by Tiger. Virgin Blue considered the possibility of establishing a low-cost offshoot to fend of Tiger Airways, but instead decided to focus the funds on their new trans-Pacific carrier, 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 AUD 5 cents, inclusive of taxes, on seven domestic routes, costing the airline AUD $25.00 per seat. Jetstar claims that the sale has nothing to do with the Tiger's 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.

Tiger commenced service to Adelaide from Melbourne on 10 January 2008. Fares of $9.95 one-way between Melbourne and Adelaide were offered a few days prior to the Adelaide launch.

Second Hub

Tiger Airways had expressed interest in starting a second hub in Australia, after the flights from Melbourne achieved a 91% Load Factor on average . It didn't singled out any single destination, but they have previously expressed that they would stay clear of airports with high fees, such as Sydney Airport and Brisbane Airport. On 5 August 2008 Tiger Airways confirmed that Adelaide Airport would be the airlines second hub which would base two of its A319s by early 2009.

Fleet

As of 1 June 2008, the Tiger Airways Australia fleet includes the following aircraft:

Tiger Airways Australia Fleet
Aircraft	In fleet	Order	Option	Engine	Seat Configuration	Routes	Notes
Airbus A319-132	0	2	0	IAE V2524-A5	144 (144Y)	Domestic — Regional
Airbus A320-232	4	1	0	IAE V2527-A5	180 (Y180)	Domestic

In March 2008, Tiger announced plans to lease two Airbus A319 aircraft for the Australian operation. The new planes will be configured with 144 seats, and will enable Tiger to operate to more destinations where runway lengths do not permit A320 operations. Tamworth has already been mentioned as a potential destination for the new planes. The two A319s will be delivered by the end of 2008.

Its CEO noted that they intend to let the Australian based airline to "grow as big as demand allows it to grow" which, based on their current statements, has been projected to be up to 30 aircraft. Tiger Airways currently operates Airbus A320 aircraft with International Aero Engines V2500 engines and seating for 180 passengers. Tiger Australia's first 5 aircraft will follow these specifications, being former Tiger Airways Singapore planes, although there has been no announcement from management whether future orders for Tiger Airways Australia will match these specifications.