Virgin Australia has announced a sweeping restructuring plan as it prepares to relaunch under new owner Bain Capital that includes suspending international routes, transitioning to an all-Boeing 737 fleet for domestic and short-haul flying, cutting 3,000 jobs, and ending the Tigerair Australia brand.
The group said the changes would ensure a “stronger, more profitable and competitive” Virgin Australia as it exits voluntary administration. CEO and MD Paul Scurrah added the airline is now the right size for the new reality of reduced demand and ongoing travel restrictions.
“Demand for domestic and short-haul international travel is likely to take at least three years to return to pre-COVID-19 levels, with the real chance it could be longer, which means as a business we must make changes to ensure the Virgin Australia Group is successful in this new world,” he said.
As part of the restructure, the Tigerair Australia brand is being discontinued. Virgin Australia said there was insufficient passenger demand to support two carriers at this time. The decision leaves Qantas subsidiary Jetstar as Australia’s only LCC.
However, Virgin Australia intends to retain Tigerair’s Air Operator Certificate (AOC) “to provide option for ultra-low-cost operations when market recovers.”
Tigerair Australia began operations in late 2007 as Tiger Airways Australia, with Virgin Australia taking a stake in the airline in October 2014. The carrier operated from three bases in Melbourne (MEL), Sydney (SYD) and Brisbane (BNE), flying 21 domestic routes last year.
In February 2020 Virgin Australia announced plans to reduce Tigerair's fleet from 13 to eight aircraft, exit five loss-making routes and close the BNE base. Operations were then suspended on Mar. 25 as a result of the coronavirus crisis.
Tigerair ended 2019 as Australia’s fourth largest carrier offering 5.01 million seats during the year, according to analysis of data provided by OAG Schedules Analyser. This was down 3.7% on the previous 12 months, but still the third highest in the airline’s history following a peak of 5.4 million in 2017 and 5.2 million in 2018.
Tigerair Australia offered flights from 12 airports in Australia in 2019, deploying 1.52 million departure seats from MEL, 1.28 million from SYD and 716,000 from BNE. Gold Coast (OOL) was the carrier’s fourth largest with almost 400,000 departure seats across nearly 2,200 flights, while Adelaide (ADL) was fifth with 291,000 departure seats.
The LCC also operated from Cairns (CNS), Canberra (CBR), Coffs Harbour (CFS), Darwin (DRW), Hobart (HBA), Perth (PER) and Proserpine (PPP).
The percentage share of departure seats from each airport suggests that CFS is most exposed to the suspension of Tigerair flights. OAG data shows that the carrier operated 88,356 departure seats from the New South Wales airport in 2019, equivalent to 33% of all departure seats during the year. Tigerair also operated more than 10% of seats from two other airports: OOL and PPP.
PER is probably least affected by Virgin Australia’s decision to drop the Tigerair brand, given the airline operated just 1.9% of the Western Australian airport’s total capacity in 2019.
Of the 21 routes operated by Tigerair in 2019, all of them were domestic. The most capacity was deployed on flights between MEL and SYD, one of the world’s busiest air routes.
There were in excess of 1 million Tigerair seats on the MEL-SYD route last year, making the airline the fourth biggest provider. Parent Virgin Australia offered 3.1 million, while Qantas provided 4.6 million and Jetstar 1.2 million.
BNE-SYD was Tigerair's second biggest route with 533,200 two-way seats, while BNE-MEL was third with 473,352. Two routes to OOL—from SYD and MEL—completed the top five with 384,228 seats and 349,878 seats respectively.
Tigerair and Virgin Australia overlapped on 18 of the 21 routes provided by the LCC. The only three routes flown solely by Tigerair and not its parent in 2019 were HBA-OOL, CFS-MEL and PPP-SYD.
Overall, Tigerair was the fourth largest provider of domestic capacity last year, offering 6.3% of all available seats.
Photo credit: Tigerair Australia