Singapore-based low-cost carrier Tiger Airways is seeking to break the "cosy duopoly" of the Qantas Airways Group and Virgin Blue through the launch of a new domestic airline in Australia.
Chief executive Tony Davis hopes the new airline will be flying in the second half of the year. Plans call for five Airbus A320s to be operating in the first phase.
Davis says it has yet to be decided where the new carrier will be based or which city pairs will be served, but "consistent with our business model in Singapore we will probably have a mix of secondary and main routes". From Singapore, Tiger already serves Darwin in northern Australia and will soon be adding Perth.
Tiger is 49%-owned by Singapore Airlines and 11%-owned by Singapore government investment arm Temasek Holdings. The remaining shares are held by US-based Indigo Partners and the family of Ryanair founder Tony Ryan.
The Australian carrier will have the same shareholders as the main Singapore-based carrier, which means it will be entirely foreign owned - something that is allowed under Australia's liberal ownership regime. This will entitle it to fly domestically as well as to New Zealand, although if it wants to operate to other international points it will need to be majority Australian owned.
Davis says Tiger's shareholders decided to set up in Australia as "there is a gap in the market for a genuine low-fare airline". Competitors will be Qantas Airways and its low-cost subsidiary Jetstar, as well as Virgin Blue.
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"Air fares domestically have been going up as the incumbent airlines have been adding cost and complexity to the model," says Davis, who describes the current environment as a "cosy duopoly" between Virgin Blue and Qantas/Jetstar. |
"We are not looking at interline, codeshare or anything else like that, which the incumbents have been doing." He adds: "We expect them to compete vigorously, but we have shown in the Singapore market that we can compete vigorously."
Australian observers are sceptical about how hard Tiger can compete with an initial deployment of only five A320s, especially when it will face Jetstar and Virgin Blue fleets of 23 A320s and 50 Boeing 737s respectively.
Tiger says it will grow its Australian fleet if its launch succeeds, but no-one knows how long that may take or if its competitors will match its fares and boost capacity on all its routes.
There had been speculation Tiger would tie up with Perth-based regional carrier Skywest Airlines for domestic services, but Davis says there have been no talks on such a partnership. The speculation arose after Tiger said it would launch services to Perth this came not long after Davis became a board member of Skywest's parent, UK-listed Advent Air. Advent also recently announced that Skywest would be adding wet-leased A320s.
Tiger now has a mix of nine owned and leased A320s operating from Singapore. Three more aircraft are due for delivery this year, followed by eight more over the following three years.
The carrier has for more than a year been looking to expand in the Asia-Pacific region by setting up additional bases and some of its new A320s are earmarked for an operation in the Philippines that it is establishing with small regional carrier Seair. Under that tie-up Seair will be leasing two A320s from Tiger and operating from Clark airport outside Manila using Tiger's branding and distribution channels.
Source: Airline Business
