Tiger eyes battle for market share
Tiger Australia's new chief executive, Rob Sharp, believes the budget-end of the air travel market will become "extremely competitive" over the next two years as his airline jostles with Jetstar for market share.
In one of his first interviews since he was named Tiger's boss, the former Qantas executive said the key to turning around the airline would be "getting the basics right", such as ensuring planes arrived and departed on time.
Mr Sharp, who started on Wednesday, faces a big job stemming losses of $60 million a year and repairing the damage to Tiger's brand from the grounding of its fleet in 2011 due to safety concerns.
"There is an opportunity here to actually move the brand further up from those dark days," he said. "The key will be getting those basics right ... that will go a long way to changing the perception." Morgan Stanley analysts believe the biggest challenge for Tiger will be to restore its reputation.
Mr Sharp said there was "no silver bullet" to repairing the brand.
Last week the competition regulator cleared the way for Virgin to take a controlling stake in Tiger after deciding the ultra-budget airline would be "highly likely" to pull out of Australia without the deal. The deal is central to the plans of Virgin to set up a dual-branded airline group, with a lower cost base than Qantas and Jetstar.
Mr Sharp expects Tiger's key rival, Jetstar, to respond aggressively to his plans to boost the size of its fleet from 11 A320 aircraft to at least 23 within the next five years.
"I am certainly wanting to fight to cement a position for Tiger in the market place, so that will mean reasonably aggressive competition," he said. "It will be an extremely competitive market at that budget end for a few years."
Jetstar has about 22 per cent of the domestic market, which dwarfs Tiger's share of about 4 per cent.
Analysts have speculated that Tiger will redeploy the bulk of its capacity from the so-called "golden triangle" of Melbourne-Sydney-Brisbane to routes focused more on leisure travel. But Mr Sharp played down the prospect of a large shift in the routes Tiger's planes fly.
Mr Sharp expected Tiger to begin reducing its losses and cash burn next financial year, but it would take two years for the business to be in a position where "it is not a negative drain".