Tigerair plans for 'sharp' fares in battle of the budget airlines
Tigerair Australia has vowed to offer "sharp pricing" of fares as it faces a tougher battle with Jetstar for budget-conscious travellers but emphasised that it will not boost flights just for the sake of growth.
Analysts have warned that an oversupply of flights over the next year will be greatest at the low-cost end of the air travel market as Tigerair embarks on plans to double its size by 2018. In response, Jetstar has promised to "protect its position" in the domestic market.
Tigerair Australia chief executive Rob Sharp said the airline is looking to expand again after a gradual return to services after its forced grounding in 2011. But the former Qantas executive made clear that the budget airline would not be sacrificing yield - or return on fares - just for the sake of filling seats.
"We are growing but we will do it in a sensible way," he said at the CAPA Australia Pacific Aviation Summit in Sydney on Friday. "The aim, at the moment, is to get a sustainable domestic business."
After buying a majority stake in Tigerair last month, Virgin said it wanted the budget airline to become profitable within two years. It is an ambitious target for an airline that has had losses of more than $226 million in Australia since launching services here in 2007.
Mr Sharp will present his long-term plan next week to Tigerair's board, which includes Virgin CEO John Borghetti as chairman.
Since the start of the year, Tigerair has begun flying to new destinations including Alice Springs and Coffs Harbour. However, Mr Sharp was coy when asked where the budget airline was set to expand to over the longer term, citing commercial reasons.
"Competition is good," he said. "This is not just about putting in $99 fares for the sake of it. It will be market driven."
The budget airline will take delivery of two more Airbus A320s over the next six months, which will boost its fleet to 13 aircraft in Australia.
Tigerair intends to better co-ordinate the arrival and departure of flights with Virgin on domestic routes but both were mindful of not "blurring the brands".
Mr Sharp said better timing of flights could make a "massive difference to yields" - or returns on fares.
Jetstar chief commercial officer David Koczkar said there was plenty of room for growth at the low-cost end of the market and its focus was on "offering sustainable low fares".