Singapore’s Tiger eyes NZ

A report in The Dominion Post says that Singapore budget airline Tiger Airways is expected to cross the Tasman by the middle of next year, putting even greater pressure on Air New Zealand, according to Centre for Asia Pacific Aviation managing director Peter Harbison.

Virgin Blue’s Christchurch-based arm, Pacific Blue, will also announce details of its domestic offering in Wellington today.

Tiger Airways, which starts flying in Australia with five aircraft in November, would certainly fly the Tasman and enter the New Zealand domestic market by the middle of next year at the latest, Mr Harbison said.

Tiger chief executive Tony Davis said last month that the open skies agreement between Australia and New Zealand meant that it could fly to New Zealand and Australia, and also domestically in New Zealand.

“We are looking at New Zealand and there is lots of airports in New Zealand that are expressing interest,” Mr Davis said.

Mr Harbison said the South Pacific aviation market was in for a major shakeup during the next year, and Air New Zealand’s lack of an Australian network could leave it exposed.

Indications are that Pacific Blue will start by flying between Auckland, Wellington and Christchurch, targeting the leisure market, and connecting its existing trans-Tasman and Pacific Island services.

A new domestic competitor has been expected and both Pacific Blue and Qantas budget offshoot Jetstar have indicated it was only a matter of time.

But analysts had earlier expected that the arrival of Singapore Airlines-backed Tiger would put their trans-Tasman ambitions on hold in the short term at least.

Mr Harbison said Virgin Blue’s decision indicated it was moving to build a comprehensive South Pacific network.  Australian-based airlines no longer considered the New Zealand domestic market a standalone market, but rather a vital part of a wider network.

Such a network would make it an attractive partner for foreign airlines that competed with Qantas.  Possibly membership of Star Alliance, which lacks Australian representation, would also be an attraction, with Air New Zealand a member of Star Alliance.

A South Pacific network would allow Virgin Blue to reduce its costs by making more efficient use of aircraft, Mr Harbison said.  “Competing against Air New Zealand, in New Zealand, is a tough call because it is a very efficient low cost full service carrier, and it has something like 75 per cent of the domestic market.”

“But if Virgin Blue could lower costs and increase yields by creating an network that covered Australia and New Zealand, that really does start to imply that it is a single market”.

Virgin Blue’s fleet of Boeing 737-800 jets and new Embraer regional jets, which recently began arriving, would give it the flexibility to “quickly move to an array of services” in New Zealand.

Air New Zealand’s lack of an Australian network would make it harder to compete regionally, Mr Harbison said.

Air New Zealand could buy Virgin Blue, which majority owner Toll Holdings was keen to sell and another way was through a tie-up with Tiger, which is backed by fellow Star Alliance member Singapore Airlines.

“It’s time to get big or find a big friend.”  “There is no plan B.”

Report by The Mole