Domestic battle blamed for Tiger losses
In an ominous sign for the country's airlines, Tiger posted an operating loss of $S13 million ($10 million) in the three months to December, compared with a loss of $S8.6 million previously.
It brings to an end a gradual narrowing of losses over previous quarters as Tiger returned to full operations after its forced grounding due to safety concerns in 2011.
Tiger said the larger loss in Australia was largely due to a 12 per cent drop in yields - or returns from fares - due to "stiff competition in the domestic market and rising costs of operations". And it warned that intense competition in Australia will continue to keep yields under pressure in the near-term. The airline's costs rose 75 per cent to $S86 million in the quarter as it began new routes, including Melbourne-Adelaide and Sydney-Mackay.
The battle between the country's four largest airlines has led to heavy discounting of fares. Qantas and Virgin Australia will reveal the damage next month when they deliver their first-half results for a period which is typically their strongest.
"The competition has kept both yields and load factors depressed," Tiger's chief financial officer, Chin Sak Hin, said.
Frequently Asked Questions about this Article…
Tiger blamed the wider operating loss on stiff domestic competition that pushed yields down 12% and on rising operating costs. The airline said heavy fare discounting in the local market and the cost of launching new routes contributed to the larger loss.
Tiger posted an operating loss of S$13 million (about US$10 million) in the quarter to December, up from a loss of S$8.6 million in the previous comparable period.
Tiger's costs rose 75% to S$86 million in the quarter, a rise the airline attributed largely to the expense of starting new routes, including Melbourne–Adelaide and Sydney–Mackay.
The battle between the country's largest airlines has led to heavy discounting of fares. Tiger said this intense competition has kept both yields (returns from fares) and load factors depressed and will likely keep yields under pressure in the near term.
Yes. According to the article, Tiger returned to full operations after being forced to ground its fleet due to safety concerns in 2011.
The report specifically cites Tiger starting new services on the Melbourne–Adelaide and Sydney–Mackay routes, which increased its operating costs in the quarter.
CFO Chin Sak Hin said the competition has kept both yields and load factors depressed, and warned that intense competition in Australia will continue to keep yields under pressure in the near term.
The article notes that Qantas and Virgin Australia were due to report first-half results the following month, and those results could reveal how much damage industry-wide fare discounting and competition have caused during what is typically a strong period for airlines.
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