Virgin axes Tigerair: What remains for Australia's low-cost airlines
Virgin Australia's new owners Bain Capital have announced they are resting the Tigerair brand, leaving just one low-cost airline in the country.
In an announcement to shareholders this morning, Virgin Australia said its budget offering would be sidelined until there were enough customers to warrant reviving it.
"The Tigerair brand will be discontinued in the market as there is not sufficient customer demand to support two brands at this time," the announcement read.
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"Tigerair Australia's Air Operator Certificate (AOC) and the resources necessary to support the AOC will be retained to support optionality to operate an ultra-low-cost carrier in the future when the domestic market can support it."
Jetstar – operated by rival airline Qantas – now remains the only low-cost carrier operating out of Australia.
Despite this, Virgin has said it will not come downmarket to compete with Jetstar but intends to operate as a full capacity airline with variable prices.
"Virgin Australia aims to be the best value carrier in the market, not a low-cost carrier," the airline said.
"It will offer exceptional experiences at great value, regardless of purpose of travel.
"The airline will serve business travellers, including corporates and customers travelling for a holiday or visiting loved ones, and maintain a two-class cabin offering."
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HOW VIRGIN BOUGHT TIGERAIR FOR $1
Tigerair may be known today as Virgin's low-cost brand, but it wasn't always that way.
When Virgin Australia launched in August 2000, it was pitched as the low-cost alternative to Qantas and known as Virgin Blue.
Virgin Blue rapidly filled the vacuum left by Ansett, which collapsed in 2001, and grew its market share and aircraft fleet to the point that it became a legitimate competitor to "premium" Qantas.
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So concerning was the growth of Virgin Blue that Qantas launched its own low-cost carrier Jetstar in 2003, to further segment the airfare market between cheap domestic flights with limited service options and expensive international hauls.
In 2011, Virgin Blue wanted to shake off its budget image and rebranded itself as Virgin Australia, effectively leaving no competitor to Jetstar.
Two years later Virgin Australia bought a $35 million, 60 per cent share of Tiger Airways Australia, which was operating as a wholly Australian owned subsidiary of Singapore-based Tiger Airways Holdings.
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The branding was strong, but the books weren't: in the 2013-2014 financial year, Tigerair lost $77 million before tax.
Knowing this, Virgin Australia went in for the kill and offered to buy the remaining 40 per cent of Tigerair Australia – including its losses – for the bargain price of just $1.
By February 2010, Virgin had turned the tide for Tigerair, announcing the airline was now profitable after offering multiple low-cost airfares in popular routes like the Melbourne to Sydney market.
Despite the success, COVID-19 wracked not only the financial performance of Tigerair but of its parent Virgin Australia, causing both to enter voluntary administration in March 2020.
Tigerair's fleet was reduced from 13 aircraft to eight, five routes were scrapped and its Brisbane base was wrapped up.
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