Virgin Australia’s low cost subsidiary, Tigerair Australia, is cutting some routes and decreasing its fleet size as the airline attempts to stem losses and reduce overall capacity.
Tigerair Australia has been flying since 2007. In 2013, Virgin Australia took a 60% stake in the airline for AUD$35 million. Two years later, Virgin Australia acquired the remaining 40% stake from Tigerair Singapore for the princely sum of AUD$1.
Tigerair Australia has a reputation for being ruthless with check in cut off times, tardy with punctuality, and happy to cancel a flight. Having said that, I travelled on them last week from Brisbane to Sydney. The flight was fine, the fare was cheap, the crew were pleasant, and I got off the plane ten minutes earlier than scheduled.
Tigerair Australia has 16 aircraft (10 Airbus A320-200s and six Boeing 737-800s) and flies to 12 destinations around Australia. In the 2018/19 financial year, Tigerair Australia earned AUD$563.4 million in revenue but its earnings before interest and tax over the same period were AUD$45 million in the red.
Given Virgin Australia is desperately trying to get back into the black itself, the last thing it needs is an albatross loss making subsidiary airline. A lot of people have been speculating that Tigerair Australia is in line for airline euthanisia and I do think its long term prospects are questionable. However, in the shorter term, Tigerair’s wings are being trimmed.
Three Tigerair Australia routes are being axed. Brisbane – Darwin and Sydney – Proserpine are ending in February 2020 and Adelaide – Brisbane is ending in March 2020.
I can guess why the Darwin flights are ending. The operating hours were unspeakably uncivilised. I get the economics of operating an aircraft through the night but who wants to arrive and depart anywhere at one o’clock in the morning.
Tigerair is pulling out of the Adelaide – Brisbane route because it is a business travel heavy trunk route rather than the more price sensitive leisure routes Tigerair is meant to be targeting. To compensate (although the fares will cost more), big brother Virgin Australia is putting about half a dozen extra flights on the route each week.
The third route, Sydney – Proserpine, is just too thin a route to sustain two low cost players. As it is, Tigerair only operates the flight three times a week, Jetstar filling the void on the other days. Now Jetstar will probably fly in daily. Jetstar is vaguely parasitic in the way it does this.
In addition, Tigerair Australia is losing two of its Airbuses as capacity is cut over the wider Virgin Australia group. Virgin boss, Paul Scurrah the changes to both Tigerair and Virgin’s network was about getting the balance right. He said:
“There are many instances where we have both aircraft operating on the same routes at the same time.
Other changes see us exiting uneconomic routes and selecting more profitable ones.
We’re also looking to re-focus Tigerair flights on key holiday destinations.”
I have a mixed relationship with Tigerair. In a perfect world I wouldn’t go near low cost carriers. But the siren call of AUD$45 fares on routes I frequent can be hard to resist. I only ever use them on short one hour flights and I occasionally have a pretty good flight with them. Tigerair offer a bit of competition to Jetstar and if they disappeared from the aviation scene, Jetstar will be jacking up their fares faster than you can type in your credit card details.
Categories: Tigerair Australia