CAPA Perspectives: Tigerair Australia has finally lost its teeth
The Tigerair Australia adventure has rarely gone smoothly, but it has finally lost its teeth. Indeed it may cease to exist in the coming months with a possible rebranding. Originally part of the Singapore-based Tiger Airways Holdings, the carrier had bumpy beginnings culminating in the honour of being the first Australian airline to be grounded by CASA. Now fully-owned by Virgin Australia, to call Tiger stagnant in 2016 would under-represent a carrier flying less domestic ASKs than it was two years ago but with a larger fleet.
- Tigerair Australia may cease to exist in the coming months and undergo a possible rebranding.
- Tigerair Australia was the first Australian airline to be grounded by CASA.
- Tigerair Australia's domestic ASKs have decreased over the past two years, despite having a larger fleet.
- Tigerair Australia currently operates 14 A320s and three Boeing 737-800s on an ACMI basis.
- Virgin Australia, the parent company of Tigerair Australia, had plans to expand Tigerair's fleet from 11 to 35 aircraft by 2018, but this is now unlikely.
- Virgin Australia lacks the resources to further expand Tigerair and has not successfully executed a dual-brand strategy.
Tigerair Australia domestic ASKs year-on-year
Tiger has 14 A320s with none left to come after disposing of four orders in 2014. The three Boeing 737-800s it flies internationally are operated by parent Virgin Australia on an ACMI basis, with just the cabin crew from Tiger. When Virgin took a 40% stake in Tiger in 2013 it told the ACCC it would expand Tiger from 11 to 35 aircraft by 2018. This is now a near impossibility.
Further growth opportunities are limited. Virgin lost the budget travel segment in its move upmarket and lacks the resources to expand Tigerair (though Australia likely couldn't support two large LCC players, just as it struggles to manage two FSCs). Virgin has the pieces for a successful dual-brand strategy. As yet it has failed to execute.