Virgin+Tiger: What It Means For Passengers

Virgin Australia has taken a 60 per cent stake in its bargain-basement rival Tiger Airways, as well as buying out WA airline Skywest and strengthening its partnership with Singapore Airlines. What will that mean for the average passenger?

Virgin picked up its stake in Tiger for a relatively low $35 million, plus an additional $5 million if the airline meets performance targets. The buyout doesn't mean the Tiger brand is disappearing. It will continue to operate as a separate brand, aimed at budget passengers. (Translation: your hand luggage will be weighed and you'll be charged extra if it weighs too much.)

This is very similar to the strategy Qantas uses with Jetstar: a bargain-priced sibling airline with an orange logo. However, the integration between Virgin and Tiger will be even less pronounced than with Qantas/Jetstar. There will be no codeshare flights and no ability to earn Velocity points if travelling with Tiger. Jetstar does codeshare some flights with Qantas, and you can earn points if you pay a surcharge.

The one thing that will change is that a wider range of destinations and flights will eventually be offered on Tiger. The plan is to expand Tiger's fleet from its current 11 aircraft to 35, which should give it more range.

Tiger Australia reached a nadir when it was shut down by authorities last September for failing to meet Australian aviation safety regulations. It resumed flying in August 2011, but has continued to experience some glitches, including a fine last week for breaking spam email laws.

It's early days for the deal, which won't be completed until June next year and requires ACCC approval. I'd expect the change to mean that Virgin flights actually become a little pricier. Virgin has been aggressively pursuing business customers, a market dominated by Qantas. Having Tiger as a bargain-basement option means that Virgin may be less inclined to sell cheaper flights on its own network. It would be nice to see Virgin change its less generous baggage policy to reflect those changes, but I doubt that will happen in the short term.

With Skywest, the situation is simpler. Virgin is buying the entire airline and expects to integrate it, but it will maintain a separate management team. The parallel here is with QantasLink. The Skywest deal requires shareholder approval, and also won't be complete until June 2013. Skywest and Virgin already have a partnership to co-ordinate flights.

All this doesn't mean you can't get cheaper flights with the "premium" carriers. Planning is the key; check out our tactics for finding cheap flights for more specific ideas, and remember to examine baggage charges carefully.

Lifehacker Australia editor Angus Kidman really needs to try Skywest at some point. His Road Worrier column, looking at technology and organising tips for travellers, appears each week on Lifehacker.


Comments

    Hrmm.. I wonder what this will mean for other providers that have been using Tiger as their connection flight partners.. like
    http:/www.flyscoot.com/
    for example.

    Last edited 30/10/12 11:11 am

      Probably nothing, seems like Virgin will just run Tiger as it is now.

      Scoot is owned by Singapore Airlines. Virgin have a tie-up with Singapore Airlines (and just sold 10% of themselves to Singapore Airlines). It shouldn't mean anything at all.

    I remember back when Virgin could have been considered a budget airline.. Now they have their own budget airline.

      Yeah, and they are seeming more expensive than jetstar, they were gonna charge $200 for a flight to Adelaide on Dec 22, jetstar ranged from 100 to 180, but thanks to price match on jetstar i got it for a steal (thanks to tiger flying to Adelaide again).

    Yo Dawg, I herd you like budget airline, so we made a budget airline for your budget airline so you can budget while you budget.

    i tells u wot dis mean it means death! dont fly tiger if u want to live

    I think Qantas will be quivering in their boots. VA is eroding their Business Pax share of the market. Tiger I expect will have the backing of the VA systems to use as a template to align them to their model, so their safety and business systems will be the big winners. Thet dont do things by halves so Tiger will be reborn I think. Also, all these announcements , will accelerate VA's plans to capture market share from Qantas. As much as they can take. The interesting thing is when VA proposed an alignment with Singapore airline Qantas cried all the way to the ACCC. "it could mean the flying Kangaroo will end up in foreign hands" was what they claimed. loosing it's identiy as Australian premuim carrier is what they actually mean. So the collective Qantas Exec team must be reaching for the oxygen masks right now ... "Damn that Borgette" (with, Pinkie in side of mouth, stroking a white cat...)

    I think Virgin Australia's strategy will be to create a similar Qantas+Jetstar offering. I.e.:

    Virgin Australia will run as a Qantas-like service
    Tiger Airways as the Jetstar equivalent

    Hopefully this wont go the way of Jetstar.
    www.dontflyjetstar.com

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