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Australia Virgin axes Tigerair: What remains for Australia's low-cost airlines

06:16  05 august  2020
06:16  05 august  2020 Source:   9news.com.au

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Tiger Airways Australia Pty Ltd, operating as Tigerair Australia , was an Australian low - cost airline . Founded by Tiger Airways Holdings, it commenced services in the Australian domestic airline market on 23 November 2007 as Tiger Airways Australia .

Virgin Australia has moved swiftly to slap down speculation that it may close its loss making low - cost subsidiary, Tigerair Australia . An investment fund manager made the call at an investor forum in Melbourne, Australia , last week, sparking a round of media speculation. But Virgin Australia says

Virgin Australia's new owners Bain Capital have announced they are resting the Tigerair brand, leaving just one low-cost airline in the country.

In an announcement to shareholders this morning, Virgin Australia said its budget offering would be sidelined until there were enough customers to warrant reviving it.

"The Tigerair brand will be discontinued in the market as there is not sufficient customer demand to support two brands at this time," the announcement read.

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Virgin will gain rights to fly low - cost brand overseas, which could see it compete internationally with Qantas-owned Jetstar.

Virgin Australia , the trading name of Virgin Australia Airlines Pty Ltd, is an Australian airline and is one of the largest operating in Australia , and is the largest airline by fleet size to use the Virgin brand.

READ MORE: 3000 Virgin staff to lose jobs as airline unveils future plans

a large air plane on a runway: Virgin Australia said its budget offering would be sidelined until there were enough customers to warrant reviving it. © AAP Virgin Australia said its budget offering would be sidelined until there were enough customers to warrant reviving it.

"Tigerair Australia's Air Operator Certificate (AOC) and the resources necessary to support the AOC will be retained to support optionality to operate an ultra-low-cost carrier in the future when the domestic market can support it."

Jetstar – operated by rival airline Qantas – now remains the only low-cost carrier operating out of Australia.

Despite this, Virgin has said it will not come downmarket to compete with Jetstar but intends to operate as a full capacity airline with variable prices.

"Virgin Australia aims to be the best value carrier in the market, not a low-cost carrier," the airline said.

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Pandemic-struck airline Virgin Australia announced Wednesday it would close budget subsidiary Tigerair Australia and lay off 3,000 staff as it prepares to relaunch under new owners. The carrier is attempting to revive its fortunes following its decision to go into voluntary administration in April shortly

Virgin Australia Regional Airlines is an Australian regional airline based in Perth, servicing key towns in the state of Western Australia .

"It will offer exceptional experiences at great value, regardless of purpose of travel.

"The airline will serve business travellers, including corporates and customers travelling for a holiday or visiting loved ones, and maintain a two-class cabin offering."

READ MORE: Victorian passengers to wear masks on Virgin flights under new COVID-19 measures

a large passenger jet sitting on top of a tarmac at an airport: Virgin will keep its air operator licence current so the brand can be revived if there is market demand for it. © 9News Virgin will keep its air operator licence current so the brand can be revived if there is market demand for it.

HOW VIRGIN BOUGHT TIGERAIR FOR $1

Tigerair may be known today as Virgin's low-cost brand, but it wasn't always that way.

When Virgin Australia launched in August 2000, it was pitched as the low-cost alternative to Qantas and known as Virgin Blue.

Virgin Blue rapidly filled the vacuum left by Ansett, which collapsed in 2001, and grew its market share and aircraft fleet to the point that it became a legitimate competitor to "premium" Qantas.

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Virgin Australia will hand over some of its international leisure routes to low - cost arm Tigerair Australia in a bid to boost its bottom line , while axing its Perth-Phuket flights on January 3 While Tigerair Australia is fully-owned by Virgin Australia , it That remains largely the case, although

Virgin Australia has hit back at critics questioning the future of Tigerair , saying it “has no intention of shutting its budget carrier”. Virgin says it “refutes speculation” from Mark Landau, managing director of investment firm L1 Capital, who told The Australian Financial Review the airline was losing so much

READ MORE: Airline staff enlisted to work in Melbourne's frontline quarantine hotels

a large air plane on a runway at an airport: Former livery for Virgin Blue aircraft. © Getty Former livery for Virgin Blue aircraft.

So concerning was the growth of Virgin Blue that Qantas launched its own low-cost carrier Jetstar in 2003, to further segment the airfare market between cheap domestic flights with limited service options and expensive international hauls.

In 2011, Virgin Blue wanted to shake off its budget image and rebranded itself as Virgin Australia, effectively leaving no competitor to Jetstar.

Two years later Virgin Australia bought a $35 million, 60 per cent share of Tiger Airways Australia, which was operating as a wholly Australian owned subsidiary of Singapore-based Tiger Airways Holdings.

READ MORE: Virgin Australia buyer commits to saving 'as many jobs as possible'

a airplane that is sitting on a runway at an airport: Five Tigerair flight routes were cancelled as a result of coronavirus, before the airline was sidelined. © AAP Five Tigerair flight routes were cancelled as a result of coronavirus, before the airline was sidelined.

The branding was strong, but the books weren't: in the 2013-2014 financial year, Tigerair lost $77 million before tax.

Knowing this, Virgin Australia went in for the kill and offered to buy the remaining 40 per cent of Tigerair Australia – including its losses – for the bargain price of just $1.

Virgin Australia to slash 3,000 jobs for slimmed post-coronavirus operations

  Virgin Australia to slash 3,000 jobs for slimmed post-coronavirus operations Virgin Australia reveals plans to make about a third of its workforce redundant, with approximately 3,000 jobs expected to go under new owners Bain Capital, while 6,000 staff remain. The private equity firm's plan for the airline sees the end of the Tiger Australia brand, although Virgin Australia said it would retain the air operator certificate so it could revive a low-cost carrier when the domestic holiday travel market fully recovered.A key part of the plan is to operate an all Boeing 737 mainline fleet, with other aircraft types restricted to regional routes and charters.

The main union at Virgin Australia , the Transport Workers Union, has welcomed the airline ’ s post-administration plans • Virgin Australia to provide customers with the value of travel credits post administration with Tigerair Australia brand discontinued with Air Operator Certificate (AOC) and

We compare Qantas, Virgin Australia , Jetstar and Tigerair on cost , customer satisfaction, on-time performance and safety. Qantas, Virgin , Jetstar, Tigerair : that' s usually the order in which we rate our 'big four' airlines , from priciest to cheapest, most reliable to least reliable, safest to least safe.

By February 2010, Virgin had turned the tide for Tigerair, announcing the airline was now profitable after offering multiple low-cost airfares in popular routes like the Melbourne to Sydney market.

Despite the success, COVID-19 wracked not only the financial performance of Tigerair but of its parent Virgin Australia, causing both to enter voluntary administration in March 2020.

Tigerair's fleet was reduced from 13 aircraft to eight, five routes were scrapped and its Brisbane base was wrapped up.

You can get up-to-date information from the Federal Government's Coronavirus Australia app, available on the App Store, Google Play and the Government's WhatsApp channel.

Beyond Blue's Coronavirus Mental Wellbeing Support Service is a 24/7 service free of charge to all Australians. Visit the site here or call 1800512348

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Video: Virgin Australia axes 3,000 jobs, discontinues Tigerair (Sky News Australia)

Virgin Australia axes 3,000 jobs, discontinues Tigerair
  Virgin axes Tigerair: What remains for Australia's low-cost airlines Sky News Australia See more videos
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