30-May-2011 10:03 AM

Without Tiger, Australian fares 'will soar': Goldman Sachs

Goldman Sachs stated that the departure of LCC Tiger Airways Australia from the domestic market would likely push up domestic airfares by as much as 15% (Sydney Morning Herald, 30-May-2011). The LCC in Apr-2011 announced it would suspend its growth plans for the Australian markets and announced a review of its network. Tiger, however, stated it has no intentions to withdraw from the Australian market. Goldman stated that Tiger's entry into Australia was one of the main reasons airfares had declined in real terms in recent years. The broker expects that if Tiger pulled out, Jetstar and Virgin Australia "would raise airfares in response to a reduction in the competitive pressures that have driven domestic real air fares to their all-time low". "Based on this, if Tiger exits the market and prices return to pre-2008 levels, arguably domestic passenger numbers could drop by about 5%." Tiger has a 6% share of the domestic travel market.

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