Competitor ... Tiger's Australian chief executive, Shelley Roberts.Credit: Andrew De La Rue
A new fare war will be waged this winter when Singapore's Tiger Airways begins flying between Australia's two biggest cities, nearly two years after it set up its domestic operation in Australia.
Until now there has been only a two-way contest on the Melbourne Tullamarine-Sydney route between Qantas and Virgin Blue, while Qantas subsidiary Jetstar provides additional competition flying from Melbourne's Avalon airport to Sydney.
Tiger will become the third carrier flying between Tullamarine and Sydney, vowing to be the price leader in the market, as it has been in most of the other routes it flies from Melbourne.
That means greater availability of fares of less than $100 one way, even for same- or next-day travel. Current discounted fares are rarely below $150 one way at short notice, except at off-peak times.
Tiger has already matched recent Jetstar specials from Avalon to Sydney of $39 one way. But it isn't under pressure to be the cheapest carrier at all costs every day, since its 24 return services a week a minimum of three a day, rising to four on the busier days will add only about 5 per cent to the number of seats being flown on the route each week.
We aim to maintain our reputation for having the lowest fares in the market.
With a first flight from Tullamarine to Sydney at 6.50am on weekdays and a first flight from Sydney at 8.45am, the spread of services will allow business travellers to do a same-day return trip, potentially for less than $200, without advance booking.
For business travellers flying on full fares, there is little change from $1000, flying either Virgin Blue or Qantas. Jetstar's same- or next-day fares start at about $240 return.
However, it might take business travellers some time to get used to Tiger's fare structure, which does not have an unrestricted "full" fare on any route but simply the best discounted fare on the day. Travellers wanting to change a booking must pay a change fee of about $40, plus any difference between the first fare quoted and the best fare on the day.
However, Jetstar has an unrestricted, changeable fare of $239 one way between Avalon and Sydney, compared with Virgin Blue's unrestricted economy fare of $265 from Tullamarine, a premium economy fare (effectively budget business class) of $399, a Qantas economy fare of $412 or Qantas business class of $637.
Tiger is not focused on the "suits" as much as its target market of "people who haven't travelled before or people who wouldn't have travelled as often", according to its Australian chief executive, Shelley Roberts.
In the most recent survey of domestic airlines by Choice, Tiger Airways rates the worst of any airline for customer service but among the best for value for money.
"We aim to maintain our reputation for having the lowest fares in the market and that includes the lowest fares on the day of travel," Roberts says.
"We're continuing to grow and buck the trend while other airlines are cutting back capacity."
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