Tiger Airways is out of action in Australia until at least the end of the month, and concerns continue that its possible disappearance from the market could result in fares going up. But if the apparent behaviour of some of its stranded passengers are anything to go by, other airlines may not be that keen to add them to their books anyway.
In an interview with the ABC’s Inside Business Program, CEO Alan Joyce notes that around 10,000 of the estimated 35,000 Tiger passengers who couldn’t fly last week took up Qantas and Jetstar’s offer of reduced fares to replace their journey. Market rumblings suggest that Virgin, which made a similar offer, might have acquired 6,000. Even if you assume some people simply rebooked without taking advantage of the specials, that leaves a lot of people who simply give up on the idea of flying if they couldn’t do so at their original bargain-basement rates.
As Joyce put it:
We’re seeing a lot of the traffic actually not travelling, which I suppose shows how price-sensitive this end of the market is.
It’s understandable that neither Qantas or Virgin don’t want to acquire a large pool of customers who would rather not fly if it means spending any extra money. It’s also worth remembering that Tiger runs just 10 jets and accounts for only 5% of the local market. No matter how cheap its fares, it would be in no position to replace all the flights offered by its larger rivals — something that’s also evident in its pricing policy, which varies more than some people realise. Also remember you can score cheaper tickets from almost any airline with the right tactics.
Qantas benefits from Tiger woes [ABC Inside Business]