Tiger Reborn: How Cheap Can It Get?

Today I’m taking to the skies on Tiger’s first flight out of Sydney to see how the airline has reshaped itself. The first question that occurs: will Tiger continue to offer super-cheap fares? So far, the answer would seem to be: yes, but in an unpredictable and restricted fashion.

The view is often expressed that without Tiger on the market, fares would be much higher. That doesn’t entirely gel with my own experience over a couple of decades of flying, since the prices I’ve paid were falling well before Tiger appeared. No question having Tiger present as a competitor maintained pressure, but it’s silly to give all the credit to Tiger and not recognise the influence of Virgin and Jetstar in that equation.

The available broader evidence on prices is, on the whole, inconclusive and incomplete. Reader Barry pointed me towards this analysis of Tiger’s impact on pricing, which pushes the line that Tiger is largely responsible for lower pricing. It’s an interesting read, but features some troublesome interpretation. For instance, it quotes ITA data as evidence of a fare rise since Tiger stopped flying, but notes that ITA doesn’t track Tiger itself. Without a context of where Tiger’s fares sat relative to these numbers, it’s tricky to draw a conclusion from them.

It also argues that Tiger’s return to the market features “no low fares”, since its cheapest fares are now $49 rather than $30 or so. By any reasonable interpretation, $49 to fly Sydney-Melbourne is a very cheap fare. If the Tiger experience shows us anything, it’s that it is unrealistic to expect constant bottom-of-the-barrel fares all the time. Ultimately, something has to give, and it appears that in Tiger’s case that something, at least in part, was safety.

The Plane Talking blog pursues a different argument from the same data: that business class fares have risen dramatically to compensate for activity in the cheap end of the market, but that even cheap fares went up last year in response to fuel prices. It also notes that the BITRE data used to assess fares doesn’t reflect the full range of market activity, or assess how many fares are available at those discounted levels.

In any event, what Tiger has done in the past is unlikely to be matched by what it does in the future, when its activity is monitored much more closely. How is it measuring up in its first week?

How my fare compares

When I booked my Tiger flight on Wednesday afternoon, the fare was set at $69.95. The next Sydney-Melbourne flight cost $59.95, and the one after that was $79.95. That pricing structure didn’t last long: by later that seem evening, the price on all three routes dropped to $49.95. If nothing else, that suggests that Tiger hadn’t spent its six weeks off concentrating heavily on its future fare structure.

The next thing to note is that even in my fare, $31 is made up of taxes and GST, and $5 was a seat selection charge which was unavoidable as part of the booking process. As such, it seems unlikely that we’ll ever see a sub-$40 fare on this route.

Getting equivalent flights on rival airlines was a much more expensive affair. The cheapest flight around the same time on Qantas was $439. On Virgin, it was $359. Jetstar didn’t have any free seats at that time of day (it only had a seat for $289 at 0700 or one for $329 at 2030. I have paid $49 on Jetstar for the same route in the past).

Direct comparison is a tricky thing, however. Both Virgin and Qantas have far more flights between Sydney and Melbourne. Virgin’s cheapest flight during the day was $185, and Qantas’ was $199. It’s also important to point out that the Virgin and Qantas fares were fully flexible and incorporated a luggage allowance. To get the same deal on Tiger, you’d have to pay $225 for flexibility and $70 for the maximum luggage allowance. At that point, Tiger would be cheaper, but not by the same amount.

In practice, I doubt that any airline would have its cheapest seats available two days before flying. That low fare was clearly a consequence of Tiger’s need to relaunch itself into the market. We’ll need a longer view (and for Tiger to expand its routings) before we can really see what’s happening. But all of this reinforces the principles we constantly promote at Lifehacker: the earlier you book and the more flexible you are, the better your chances of getting a discount. If you’re organised, you’ll have a range of cheap choices.

Next up: I’ll post from the airport on the check-in experience.