Tiger set to grow after picking HQ

Daily Telegraph, 4 May 2007
Steve Creedy

TIGER Airways could start adding planes to its Australian fleet as early as next year after yesterday confirming Melbourne as its national headquarters.

Tiger chief executive Tony Davis said the low-cost carrier was on track to start flying in Australia with five 180-seat Airbus A320s by the end of the year, but expected to take delivery of eight new planes next year.

“Those aircraft could either go to Asia or they could come to Australia,” Mr Davis said. “Beyond that, I think the board would have to consider (additional aircraft) and I’m sure they’ll be doing that over the next few months.”

Mr Davis said the Singapore-backed carrier saw opportunities to continue growing both in Australia and across Asia and did not see five aircraft as the limit of its aspirations here.

“Clearly we expect the product to be very popular with Australian consumers and we expect to grow the business, but we’d do it in a sustainable way and a carefully managed way,” he said.

Tiger expects to create 1000 direct and indirect jobs in Victoria and estimates its five aircraft will carry 2 million passengers a year.

Melbourne Airport beat Avalon as the base for Tiger’s domestic start-up because it could handle the scope of the airline’s launch operations and cater for its future growth.

“The amount of impact that Tiger’s operation will have meant that a number of airports, including Avalon, didn’t have the infrastructure capacity available to accommodate such a large initial operation,” he said.

“I think that’s probably a good way of showing that the impact we’re going to have on the Australian market is going to be pretty significant.”

Although the airline appears to be positioning itself to start services on the Sydney-Melbourne-Brisbane “golden triangle”, the Tiger chief was not prepared to reveal routes, other than to say the network would be Australia-wide. He would not confirm claims by Brisbane Airport that it would be one of the first destinations serviced by the new carrier.

Asked about Darwin and Perth, he said: “I think those would be very likely candidates but at this point we’re not confirming any particular route network until a bit closer to the start of operations.”

He said the airline’s application for an air operator’s certificate was on track for a launch later in the year and the airline was looking at several dates.

He believed the airline benefited from the fact it already operated to and from Australia, using A320s.

“That means that we already have the necessary operating manuals and security programs that would be necessary for an AOC application for a domestic licence,” he said.

“So I think we feel that the AOC is progressing, and now we’ve confirmed that headquarters and the base of initial operation will be here in Melbourne, that gives a lot more certainty to the AOC process and the documentation that we need to submit to CASA.”

However, Mr Davis took umbrage at suggestions from competitor Jetstar that Tiger’s foray into the Australian market may be undercapitalised.

Jetstar chief executive Alan Joyce questioned whether the loss-making carrier, which is backed by Singapore Airlines, had set aside enough money for its Australian start-up.

“They’ve lost $60 million in Singapore and he’s coming in here with $10 million,” Mr Joyce said.

“Impulse had $100 million when it started. Getting established in a marketplace does take a big investment. I hope he has the funding to do it.”

But Mr Davis said Tiger had lost less money than Jetstar Asia and was well placed to launch its Australian operations.

“We have no cash debt for our business at all. We’ve been cash flow positive now for 18 months.”