Airlines have a blue over Tiger
The Age says that the battle for control of the low-airfare market flared yesterday with Virgin Blue and Jetstar turning their guns on newcomer Tiger Airlines at an aviation conference in Sydney.
Tiger chief executive Tony Davis found himself in a gloves-off confrontation with Jetstar boss Alan Joyce, and a few minutes later came under rigorous questioning from senior Virgin Blue executive David Lloyd.
Mr Davis sought to deflect Mr Lloyd’s shots about how Tiger was being funded and what Mr Davis would do to keep the new Australian arm of his business afloat once Tiger exhausted the $10 million it has to fund its start-up.
“It’s pleasing to know that my competitors are coming to me to seek business advice,” Mr Davis said.
During a panel discussion, Jetstar’s Mr Joyce referred to Tiger as a business controlled by the Singapore Government and funded by its taxpayers. Singapore Airlines is a major shareholder in Tiger.
Mr Davis replied that Temasek Holdings, the Singapore Government’s investment arm and the fourth biggest stakeholder in Tiger, was also a major investor in the Qantas subsidiary Jetstar Asia.
He added that Qantas had acquiesced to demands from Singapore and appointed a former head of the Singapore mint to run the Australian airline’s low-cost offshoot in Asia.
Mr Joyce later hit back, telling Mr Davis that while Tiger was able to take advantage of the Australian Government’s open skies policy where any airline can set up shop and operate within Australia, Jetstar Asia was barred from flying between Singapore and the Malaysian capital Kuala Lumpur.
“That’s a cheap shot,” Mr Davis snapped after Mr Joyce told him Tiger could operate between Melbourne and Sydney but Jetstar could not fly to Malaysia.
Unlike the other panellists the pair did not shake hands when the session ended.
Mr Davis later told BusinessDaily: “Everyone should just get on with running their businesses.”
It is considered highly likely Tiger will go back to its shareholders for extra cash once its fleet of five aircraft start service in Australia later this year.
Virgin Blue, which launched with two Boeing 737 aircraft seven years ago, spent $13 million in its start-up phase plus several million more until it turned a profit after the collapse in 2001 of Ansett.
Impulse Airlines, which launched a few months ahead of Virgin Blue in 2000, was folded into Qantas after less than a year, after losing $110 million.
In his conference address before the tense panel discussion, Mr Davis explained that Tiger’s philosphy followed a well known American retail philosphy of “stack ’em high and sell ’em cheap”.
He said Tiger operated on lines similar to cinemas, which made nothing from selling tickets but reaped profits from sales of “Coke and popcorn”.
Tiger yesterday announced a $59 one-way fare between Melbourne and the Sunshine Coast, beginning on December 1.
Report by The Mole
John Alwyn-Jones
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