Tigerair to join transcontinental fight for passengers
Analysts warn that Virgin Australia, which has a controlling stake in the budget airline, risks losing passengers to Tigerair because its customers are more sensitive to ticket prices than those who fly on Qantas.
The latest route to be launched by Tigerair will also put pressure on its arch rival, Jetstar.
Tigerair will operate up to six weekly return flights using A320 planes between Sydney and Perth from December 19, which will compliment its existing Melbourne-Perth services.
Dampening concerns about too much capacity on the transcontinental routes, Tigerair chief executive Rob Sharp said he believed its entry to the Sydney-Perth route would encourage more people to fly. "We believe we will have a stimulatory effect. Our growth is going to be driven by where we see demand," he said.
Tigerair and Virgin are now able to co-ordinate flights after the latter received approval to buy a 60 per cent stake earlier this year, and Mr Sharp said his airline would not be flying routes if it cannibalised its controlling shareholder's market. "We have quite a different product [to Virgin] and the capacity from east to west is largely wide-body aircraft [in contrast to Tigerair's single-aisle planes]," he said.
The battle between Qantas and Virgin over the last year has been the fiercest on transcontinental routes, with both flying larger twin-aisle aircraft such as Airbus A330s. But analysts have warned that an oversupply of flights in the Australian market over the next year will be greatest at the low-cost end of the market as Tigerair embarks on plans to double its size by 2018. Jetstar has promised to "protect its position" in the domestic market.
Commonwealth Bank analyst Matt Crowe said he was slightly surprised by Tigerair's decision to enter the Sydney-Perth route, given the slowdown in the Western Australian economy.
"It fits with Virgin's original claim that they were going to put Tiger into new markets but from an industry point of view we would like to see less capacity come into the market," he said. "It makes it a little bit tougher."
Mr Crowe said there was greater risk to Virgin of it losing customers to Tigerair than Qantas passengers deciding to fly with Jetstar. Virgin's passengers tended to be more price sensitive.
Tigerair will take delivery of two more Airbus A320s in coming months, which will boost its fleet to 13 aircraft in Australia.
Frequently Asked Questions about this Article…
Tigerair Australia will begin flights between Sydney and Perth from December 19. The airline plans up to six weekly return services using Airbus A320 single‑aisle aircraft, complementing its existing Melbourne–Perth services.
Tigerair’s entry adds capacity to an already saturated transcontinental market and is likely to increase price competition. Analysts say the move will put pressure on low‑cost rivals like Jetstar and could reshape the competitive dynamic between the major carriers on east–west routes.
Analysts note Virgin’s passengers tend to be more price sensitive than Qantas flyers. With Virgin holding a controlling stake in Tigerair, Tigerair’s low‑cost fares could attract price‑sensitive customers away from Virgin, increasing the risk of passenger migration at the lower end of the market.
Tigerair and Virgin can now coordinate flights after Virgin received approval to buy a 60% stake. Tigerair CEO Rob Sharp said the airline would avoid flying routes that cannibalise its controlling shareholder’s market, and he noted the carriers offer different products—Virgin often uses wide‑body aircraft while Tigerair operates single‑aisle A320s.
Analysts warn an oversupply of flights next year could be greatest at the low‑cost end as Tigerair aims to double in size by 2018. Oversupply can pressure fares and margins for budget carriers and may intensify competition with rivals like Jetstar, which has pledged to protect its domestic position.
Tigerair will take delivery of two more Airbus A320 aircraft in the coming months, which will increase its Australian fleet to 13 planes and support its planned route and capacity expansion.
Tigerair CEO Rob Sharp said he expects the Sydney–Perth entry to have a stimulatory effect, encouraging more people to fly. He emphasised the airline’s growth will be driven by where it sees demand rather than simply adding capacity for its own sake.
Investors should monitor route launches (like Tigerair’s Sydney–Perth service), capacity increases, fleet deliveries, pricing trends at the low‑cost end, and ownership or coordination moves (for example, Virgin’s controlling stake in Tigerair). These factors can influence fares, load factors and competitive positioning across the domestic market.
Call 1300 880 160
Start a chat
Schedule a call
