Virgin Australia COO Sean Donohue, speaking at the CAPA Australia Pacific Aviation Summit, stated (07-Aug-2013) the rationale behind the acquisition of Skywest Airlines in Apr-2013 is to better compete in the Australian regional and charter market, while the 60% acquisition in Tigerair Australia is to compete in the low-cost market. Mr Donohue noted the carrier's
Virgin Australia rationale for the acquisition of Tigerair Australia is to compete in the LCC market
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Australia and New Zealand hit highs in 2016, but 2017 will lose a little lustre
Australia and New Zealand enter 2017 on a different level from 12 months previously. The biggest change, not just compared to 2016 but since the global financial crisis, is that Qantas is revelling in a successful turnaround. After the lows of 2011 and a domestic competitive bloodbath, the Qantas Group has seemingly become a solid and sustainable story, now looking forward to a new future marked by Boeing 787s, arriving later in 2017.
Air New Zealand has continued along its thoroughly profitable path, while Virgin Australia and its Tigerair Australia subsidiary have struggled to achieve profitability in the new environment – now with a more settled share registry and emerging strategy.
After a mineral boom that carried Australia through the difficult years of 2008-2010, the country’s GDP growth has since slipped to 1.8% in 3Q2016 calendar year, with an outlook for 3.0% for the full FY2017. By contrast, New Zealand’s Treasury expects GDP growth of 3.6% for 2016 and has forecast a 3.5% increase in 2017.
Tigerair Australia Part 2: LCC looks to Value Alliance to drive near-term growth opportunities
Tigerair Australia has no immediate plans for expanding its international operation, which launched with three routes to Bali in Mar-2016. However, the Virgin Australia LCC subsidiary plans to expand its international network virtually by linking up with partners from the newly formed Value Alliance.
The Bali operation has been relatively successful, despite the use of aircraft wet-leased from its full service, higher-cost parent. However, for now Tigerair Australia is focused on transferring the three Bali routes to its own fleet as part of a transition from A320s to 737s, rather than pursuing growth.
The Virgin Australia LCC subsidiary could potentially pursue international growth once it secures regulatory approvals to operate international services with its own operator’s certificate. Some domestic growth is also possible once it completes the transition from A320s to 737s in 2019.