Tigerair Australia proves it’s ‘true blue’ despite Qantas concerns
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A government body has paved the way for Virgin Australia subsidiary Tigerair Australia to begin operating low-cost flights to Bali despite concerns raised by rival Qantas.
The ruling by the International Air Services Commission, deeming Tigerair an “Australian international airline”, should also make it easier for Tigerair to add more international destinations such as New Zealand and Fiji. Obtaining this designation was a prerequisite for Tigerair to apply for an international airline licence.
Virgin had applied to the IASC to vary the terms of its allotted capacity to Bali so that a wholly owned subsidiary, Tigerair, could also use it. The positive decision helps clear the way for Tigerair to launch flights from Melbourne, Adelaide and Perth to Bali from March, taking over routes that are currently flown by Virgin.
To be designated an “Australian international airline”, a carrier needs to be majority-Australian owned. More than 80 per cent of Virgin shares are held by overseas investors including Air New Zealand, Etihad Airways, Singapore Airlines and Sir Richard Branson’s Virgin Group. However, in 2012 it split off its international arm and gave it its own board to meet the ownership requirements under the Air Navigation Act.
Qantas concerns
In 2013, when Qantas boss Alan Joyce was seeking government aid for his then-ailing carrier, he called the Virgin structure a “sham”. “We all know that Virgin’s international business has no independent existence apart from the foreign-controlled domestic business: no assets, no management, no people, no funds,” Mr Joyce said at the time.
In a submission to the IASC last week, Qantas said Virgin needed to prove its subsidiary was an Australian carrier in order for a complete assessment of the application to be made.
“More than 80 per cent of Virgin shares are held by overseas investors including Air New Zealand, Etihad Airways, Singapore Airlines and Sir Richard Branson’s Virgin Group.”
A Virgin spokeswoman said on Friday Tigerair’s international arm was a subsidiary of Virgin’s international arm.
Tigerair will use Virgin international’s Boeing 737 aircraft and pilots on the Bali route, although the flight attendants will be employed by the low-cost carrier. There are no plans for Tigerair to apply for a separate air operator’s certificate for its international operations, but it is required to obtain an international airline licence, which is a less onerous process.
The IASC on Friday approved Virgin’s application to transfer some of its Bali capacity allocation to Tigerair, after being advised by the Department of Infrastructure and Regional Development that the budget carrier complied with the ownership and control obligations of the Air Navigation Act.
The IASC said there would be a public benefit to Tigerair flying to Indonesia, which had outbound traffic of 1.1 million passengers in the year ending July. Other carriers that operate the route include Jetstar, Garuda Indonesia, Virgin, AirAsia Indonesia and Indonesia AirAsia X. Qantas has also announced plans for seasonal flights to Bali from Sydney in December and January.
“The commission considers that Tigerair’s proposed services between Australia and Indonesia will likely benefit consumers, as Tigerair’s presence on the Indonesia route will likely promote competition on this popular route,” the IASC said.
Questions & Answers
Q.What specifically allowed Tigerair, a subsidiary of Virgin Australia, to be designated an 'Australian international airline' despite Virgin's majority foreign ownership?
What specifically allowed Tigerair, a subsidiary of Virgin Australia, to be designated an 'Australian international airline' despite Virgin's majority foreign ownership?
Virgin Australia split off its international arm in 2012, giving it its own board to meet the ownership requirements under the Air Navigation Act, which allowed Tigerair to receive the designation.
Q.What routes will Tigerair be operating to Bali, and when are these services expected to begin?
What routes will Tigerair be operating to Bali, and when are these services expected to begin?
Tigerair will launch flights from Melbourne, Adelaide and Perth to Bali. These services are expected to begin from March, taking over routes currently flown by Virgin.
Q.What resources will Tigerair use for its international operations to Bali?
What resources will Tigerair use for its international operations to Bali?
Tigerair will use Virgin International's Boeing 737 aircraft and pilots for the Bali route. The flight attendants, however, will be employed by Tigerair itself.
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