By Matt O'Sullivan
AN EXIT of budget airline Tiger Airways from Australia would push up domestic fares by up to 15 per cent, analysts estimate.
Tiger this month suspended its ambitious growth plans for Australia and announced a strategic network review that could result in it ditching loss-making routes.
Tiger's departure would push up domestic fares.
The airline, which was slapped with a show-cause notice by the air regulator in March, has insisted it has no plans to pull out of Australia despite mounting losses.
The notice was sparked by concerns about aircraft maintenance and forces Tiger to explain to authorities why it should not have its licence to fly revoked.
But reassurances about its commitment to Australia have not stopped Goldman Sachs analysts publishing a report about the impact a withdrawal would have on leisure fares, industry competition and airports.
The analysts said fares could increase by about 15 per cent because Tiger had been one of the main reasons prices had fallen in real terms over the past three years.
''We would that expect that … Jetstar and Virgin would raise air fares in response to a reduction in the competitive pressures that have driven domestic real air fares to their all-time low,'' they said.
''Based on this, if Tiger exits the market and … prices return to pre-2008 levels, arguably domestic passenger numbers could drop by about 5 per cent.''
The analysts said Gold Coast's airport would be the hardest hit if Tiger exited Australia because of its reliance on leisure travellers, while Melbourne's Tullamarine airport would suffer slightly as it is the budget airline's Australian base. Tiger has a 6 per cent share of the domestic travel market.
Tiger reiterated yesterday it was committed to keeping its operations in Australia, and dismissed speculation it may abandon its second Victorian base near Geelong. ''We have no plans to close down [at] Avalon,'' a Tiger spokeswoman said.